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Today, the collection of cryptomemes from Elon Musk has replenished. We present it to your attention:
Cryptocurrencies turned out to be susceptible to Elon Musk’s tweets: one of his statements can bring down or raise digital money rates. How long will this influence last and can crypto investors lay claim to Musk?
The head of Tesla, during The B Word conference dedicated to bitcoin, admitted that in addition to bitcoin itself and Dogecoin, he owns Ethereum. After this announcement, the price of “ether” rose by 12% and exceeded $2,000. This is not the first time that the course of digital money has changed dramatically after Musk’s statements. Why is a billionaire manipulating the cryptocurrency market?
Rise and fall
“Looking back [мы понимаем, что] it was inevitable,” Musk tweeted on January 29, 2021, adding the #bitcoin hashtag to his profile description. This hint was enough for investors – bitcoin shares instantly soared 20% to $37,700.
Tesla soon announced that it had invested $1.5 billion in bitcoin and was going to accept bitcoin as payment for its products. Just eight days later, on February 16, bitcoin hit a record high of $50,000 — by that time, the growth of cryptocurrency since the beginning of the year was 72%.
However, in May 2021, the entrepreneur announced that Tesla would stop accepting payments for electric vehicles in bitcoins due to the unsustainable way of mining cryptocurrencies. As a result, Bitcoin fell by 15% to $46,200. At the same time, Musk said that the company would not sell cryptocurrency. A few days later, the value of the cryptocurrency fell again – below $45,000 – this happened after Musk’s discussion on Twitter. The billionaire agreed with one of the users of the social network, who wrote that in the next quarter, the owners of bitcoins will be annoyed if they find out that Tesla has disposed of its remaining cryptocurrency assets. “Indeed,” Musk replied.
At the same time, the billionaire during The B Word conference said that he would continue to keep cryptocurrency in his portfolio. “If the price of bitcoin falls, I will lose money. I can rock [криптовалюту]but don’t drop [ее]’, Musk said during the event. He also revealed that Tesla will accept bitcoin in the future as mining becomes more environmentally friendly.
Another cryptocurrency that Musk also knows how to influence is Dogecoin: it appeared as a joke and is symbolized by a meme with a happy muzzle of a Shiba Inu dog. In early February, Musk posted a photo of a flying Falcon 9 rocket and captioned it Doge. In less than an hour, the price of Dogecoin rose by 47% to $0.059 per token.
Two days later, Musk called Dogecoin “the people’s cryptocurrency”, and a little later he wrote that he bought it for his son X Æ A-12. “Dogecoin may be my favorite cryptocurrency,” Musk wrote back in April 2019, when users of the cryptocurrency Twitter account jokingly chose him as the head of their project.
Dogecoin surged 30% ahead of Saturday Night Live, which Musk was scheduled to host on May 8. And after Musk’s speech, in which, firstly, he admitted that he had Asperger’s syndrome, and, secondly, he called Dogecoin “hype”, cryptocurrency shares fell by 28%. At the beginning of the show, the price of Dogecoin was $0.65, and a few hours after the end of the show, it was $0.47.
Factor Mask
“Ilon’s influence [на рынок криптовалют] will not last forever,” said Vitalik Buterin, the creator of the Ethereum cryptocurrency, in an interview with CNN in May 2021. He noted that the cryptocurrency space first encountered Musk’s tweets in 2020. However, Buterin believes that markets will learn to cope with its impact in the future.
The fall of bitcoin in the spring of 2021 was a kind of blow to Musk’s reputation, the expert continues, since such a sharp change in Tesla’s financial policy looked like a deception of the expectations of investors who were guided by Musk. “Over time, the impact of Musk’s statements on investors is decreasing. Now he has returned to the ranks of Bitcoin supporters. This can be regarded as a rational decision, since Musk himself, Tesla and Space X, according to the entrepreneur, have bitcoins, and the fall in the cryptocurrency rate is not beneficial for him, ”Kivkulis believes.
Musk has tens of millions of followers on Twitter, his publications are reprinted by all media and read in the crypto community, but his influence on the cryptocurrency market will decrease, Rustam Botashev, chief analyst at the Hash CIB crypto investment bank, agrees. “Elon Musk is a PR genius, with his help he has earned hundreds of billions. After all, undoubtedly, when buying bitcoin, he knew that his mining was energy-consuming,” says Botashev.
The time is coming in the world when it will no longer be states that will make fateful decisions for countries and people, but large cross-border companies and their owners, objected Alexander Brazhnikov, Executive Director of the Russian Association of the Cryptoindustry and Blockchain (RACIB). According to him, Musk is a prime example of this. Each of his statements is a well-thought-out action to influence the financial market, Brazhnikov is sure. “Billionaires are already flying into space on their own and this shows that now a private person can do more than the state,” he notes.
Elon Musk is clearly aware of the power of his publications and the subsequent impact on the markets: they bring direct benefits to him and Tesla, while having a devastating effect on small retail investors, says Shirley Valge, COO of Velas Network AG. At the same time, it characterizes a new generation of investors who would rather blindly follow celebrities than form their own opinions using research and fundamental analysis, she said. According to Valge, soon the world will see more and more major influential people, including politicians, who, with their statements, will provoke the volatility of digital assets. This could be a reason for introducing regulation to prevent manipulation, she said.
Musk has previously clashed with the US regulator over Twitter posts. In 2018, the US Securities and Exchange Commission (SEC) initiated proceedings after a series of jokes by Musk about Tesla’s bankruptcy. The parties entered into a settlement agreement under which Musk stepped down as chairman of Tesla’s board of directors, paid a $40 million fine, and agreed that all of his social media posts must be pre-approved if he is going to discuss information that is material to Tesla’s business.
But in the case of cryptocurrencies, regulatory problems do not threaten the entrepreneur, Yaroslav Shitsle, head of the IT & IP Dispute Resolution department at the law firm Rustam Kurmaev and Partners, believes. Unlike the securities market, cryptocurrencies are still in the gray area for the SEC, so Musk does not face criminal or administrative liability. At the same time, the SEC is currently reviewing several applications for the creation of “Bitcoin ETFs” – exchange-traded funds that will use bitcoin as an underlying asset, Schitzle says. If such funds are approved in the United States, then the story of SEC claims against Elon Musk may repeat itself, because in this case, his publications may already have an impact on the shares of American citizens that they buy on the exchanges, the lawyer warns.
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