Lately, the crypto market seems to rely heavily on Elon Musk’s tweets. After all, every tweet he publishes influences the market value. The CEO of Tesla, a billionaire, and the world’s richest person, has been tweeting a lot lately about crypto.
In some instances, his tweets have caused the value of Dogecoin and Bitcoin in the market to soar. It only takes a few characters to create such a great impact. In this text, we’ll look at Elon Musk’s influence on the crypto market.
The impact of Musk’s Tweets on Bitcoin
For the better part of last year, Elon Musk’s tweets had a powerful impact on bitcoin. For instance, one Sunday-night tweet about Bitcoin caused its value to soar by almost 10%.
While his tweets are not particularly aimed at benefiting his financial interests, it does affect that of other investors. His influence on the market evokes the question of market solidity and demonstrates that the crypto market can get swayed easily. This is more so the case due to the increasing entry of retail investors in this space.
And in mid-April 2021, Coinbase ventured into new waters. It became the first prominent crypto company to take this course in the US. This move signified the mainstreaming of blockchain-based currencies like Dogecoin, Ethereum, and Bitcoin .
However, the price roller coaster was set in May. This is also when Musk denounced the use of Bitcoin to purchase Tesla commodities. Musk cited environmental concerns, since Bitcoin mining consumes an intense amount of energy, with a significant carbon footprint. As a result of that tweet, the value of Bitcoin plummeted heavily by about 15%.
Later, while responding to a tweet from another handle (@CyptoWhale), he indicated the possibility of Tesla selling its crypto holdings. Due to that tweet, the value of Bitcoin dropped even further.
On 17th May, Musk’s statement that Tesla was not selling their bitcoin holdings after all put an end to the downward spiral. The prices stopped dropping and instead stabilized at around $45k. Several days later, Musk went on to mitigate the Bitcoin issues on environmental impact. He called out the North American miners to reveal the use of renewable energy. This was potentially promising to Bitcoin. As a result, its value soared by 4%.
However, that wasn’t the end of Musk’s talk about Bitcoin. His tweet about abandoning bitcoin brought down its value once again by 5%. In June, he tweeted about Tesla’s statement that they would consider Bitcoin once more if miners decided to use renewable sources of energy. Owing to this tweet, Bitcoin prices went up once again by 8%.
The impact of Musk’s Tweets on Dogecoin
Musk’s doesn’t just tweet about Bitcoin, he also targets other blockchain-based crypto ventures. This includes Dogecoin. In May 2021 the prices of dogecoin soared by 30% thanks to Musk’s tweets. That month, he tweeted about working with Dogecoin’s developers to improve the efficiency of this currency.
He followed up with another tweet in May increasing the value of dogecoin in the market further. At the start of that month, Musk hinted at accepting Dogecoin as payment for SpaceX services. This would allow clients leasing their services to send items into spaces using Dogecoin to meet payments.
Additionally, SpaceX claimed they will send nearly 40kg of satellites to the Moon. These satellites will be known as DOGE-1. According to Tom Ochinero, an executive at SpaceX, these DOGE-1 satellites will demonstrate the use of crypto in space. Furthermore, they will set a base for commerce transactions across planets.
In simple terms, Musk’s tweets have a significant impact on crypto value. If you look at charts with the impact of tweets against the crypto value, you’ll understand this. When it comes to crypto, you need to understand the significance of the societal speculation and memes. Similarly, you should understand the game theory and tech that makes bitcoin safe. According to CoinDesk data and indexes director, Galen Moore, these factors frequently evoke debates about the manipulation of prices.
Tesla Inc bought Bitcoin worth $1.5 billion in 2021. After this purchase, Bitcoin prices hit a record high. Several weeks later, they disposed of 10% of their bitcoin holdings with a value of 101 million USD. That’s according to their annual report to SEC that year. Owing to that sale, Tesla made great profits. And indeed, more of their profits that year were from Bitcoin sales rather than car sales.
Thereafter, Musk tweeted that this sale was just a test. They were testing the rate at which you can liquidate Bitcoin if need be without moving the market.
What we don’t know
While we all witness Musk’s tweets on crypto as they come and go, we can’t tell for sure if there’s a hidden agenda. We can’t tell if Musk or his companies are generating profits from the crypto market through his tweets. And we still don’t know if he buys Bitcoin with the help of his influential tweets.
Just like other cryptocurrencies, Bitcoin is not under the US SEC laws. As such, they have to contend with fewer regulations than stocks. For this reason, they’re susceptible to price manipulation and fraud. In fact, SEC warned people on 11th May about the potential for price manipulation and fraud. Therefore, if you are trading in bitcoin, you’ve got to do it carefully.
SEC fine on Tesla Inc and Musk
While Musk can joke about cryptocurrencies through tweets and, thereby, influence their prices, the same does not apply to his companies. In 2021, Musk and Tesla Motors were both fined 20 million USD each. This was after his tweet about having secured funding that made Tesla Stocks soar to record high.
In reality, Tesla hadn’t actually secured funding. Part of the settlement required Musk to consult his lawyers first before posting something about the company on Twitter. That’s something he definitely hadn’t been doing before. This situation was confirmation that it is not fair when a person can influence the value of bitcoin easily.
Speaking of fairness, Musk is not the only person generating money from Tweets. Yes, you’ve got that right. Impersonators and scammers leveraging Musk’s influence. According to the Federal Trade Commission, consumers lost about 2 million USD through impersonation scams within 6 months.
This demonstrates the powerful influence of Musk over this market. Musk is so influential that impersonators also take advantage of his influence to scam people. They’re able to create tweets and affect the market value of bitcoin to a certain degree.
With the growing popularity of the crypto market, Musk’s Empire is also experiencing the same growth.
Musk’s recent views on crypto
Recently, the mogul tweeted about the influences of inflation on numerous asset classes to his millions of followers. He announced that there are benefits of investing in the crypto market. As a result, he’s not planning to dispose of any of his crypto holdings.
As a rule of thumb, if you’re looking for wisdom from this thread, it’s important to own physical assets over a dollar. That’s because inflation can impact the dollar value but not that of company stocks and or homes. Musk made it clear through his tweets that he has no plans of selling any of his crypto investments. He owns Dogecoin, Ethereum, and Bitcoin, and he’s keeping all of them regardless of their market value.
Earlier on, he made it public that he’s a holder of Bitcoin, Dogecoin, and Ethereum. And as of now, Tesla Motors ranks second among the largest non-crypto-exchange bitcoin corporate owners in the world. More specifically, the company owns 38, 300 Bitcoin, ranking second after MicroStrategy.
Inflation is not slowing down
Elon isn’t a financial analyst. However, his approach to asset management proves otherwise. From a perspective of rising inflation, it’s logical. According to him, whichever asset you decide to invest in, it must generate more returns than inflation. Unless that happens, you’ll be making losses. Considering the recent and current soaring inflation, this is even more challenging. However, even with the persistent inflation, Bitcoin, Dogecoin, and Ethereum generated higher returns in 2021.
Why Elon Musk prefers Dogecoin for transactions
According to the CEO of Tesla and SpaceX, Dogecoin is better than bitcoin for transactions. While having an interview with Time Magazine, Musk said Dogecoin is the best for transactions among crypto coins.
For starters, the transactional value of Bitcoin is lower. It also has a higher cost per transaction. At the very least you can leverage it for store value at the space level. Ultimately, however, bitcoin is not a good currency when you consider the transaction value. While Dogecoin is a result of a joke, it’s the best cryptocurrency for transactions.
What exactly is Dogecoin?
Dogecoin is a cryptocurrency that was developed by Billy and Palmer in 2013. They are both software engineers. It was created to compete with bitcoin. Beyond competing, this cryptocurrency was designed to serve as a bitcoin alternative. This cryptocurrency started as a satirical joke – its name was crafted from Shiba Inu, a viral meme from several years earlier. The logo was also supposed to be satirical.
Why Musk praises Dogecoin more
As per the findings by Coindesk, when you use Dogecoin, the transaction fee is significantly lower. On average, it’s about $0.65/ transaction. On the other hand, when you use Bitcoin, you will spend about $15.
This revelation came after Musk announced that Tesla will allow Dogecoin as payment for its merchandise. However, it’s still a test to see how consumers or the market will respond. In other words, you can now buy specific Tesla merchandise you can buy with dogecoins. This includes: belt buckle, apparel, mini model, Cyberwhistle, and quad bike among others. Following this announcement from Musk, the value of Dogecoin rose by 24%.
While he also holds Bitcoin and Ethereum, Musk fully supports Dogecoin. This became apparent during his spat with Changpeng Zhao, the Binance CEO. He raised crucial concerns like the latest Doge issue with crypto-exchange Binance. This disagreement highlighted numerous erroneous transactions.
In some cases, users would complain that their account is accessible. Musk wanted to know what was happening with doge clients. Is there a hidden agenda? In the meantime, he has been endorsing Dogecoin more than Ethereum. He says this is because doge plays a pivotal part in decentralized finance (DeFi).
With DeFi transactions, you don’t need intermediaries, banks, exchange platforms, or brokerage. Thanks to these features, you can maintain custody over your crypto assets based on Ethereum.
Conclusion
Elon Musk’s tweets might confuse you when you’re trying to figure out which blockchain startup he prefers. Regardless of what you think might be his favorite, note that he’s a holder of three different cryptocurrencies. More specifically, he owns Dogecoin, Bitcoin, and Ethereum. If there’s one piece of advice you can take home from him without a doubt, is not to invest in the dollar.
During inflation, your cash will lose value. However, that will not be the case with digital assets. For a change, you may want to try out bitcoin or dogecoin as an investment. They’ve got the potential to generate revenue despite the volatility that runs across most investments.
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