Will Musk Stimulate Bitcoin Growth Again?
Cryptocurrency markets have been extremely sensitive to Elon Musk’s tweets over the last year. Seems like even the slightest joke he makes immediately affects the markets. Financial experts are explaining this phenomenon by the psychological effect of the market movements. But maybe the vast crowd is in actuality smarter than the Wall Street analysts think.
The thing here is that most of Musk’s tweets were precursors to big announcements. Just like the big Bitcoin purchase of Tesla worth $1.5 billion that occurred earlier this year. Elon Musk did the smallest possible move. He placed the Bitcoin sign in the bio to his Twitter account. The price of the oldest cryptocurrency exploded afterward. Further on, after the news about Tesla and a series of likewise events, the price of Bitcoin continued to beat its all-time highs, one after another.
So, in order to analyze the probability of future events, traders and investors in crypto want to know what patterns of Elon’s behavior could be proved as systemic and what conclusions is it possible to draw from this information. In other words, is Elon Musk joking or not? And what is his motivation? Will he continue to push Bitcoin higher or he is interested right now in lowering the price and then buying big chunks of it again? Let’s look at the whole picture and try to figure it out.
The History Of Tweets
For those who are trying to explain somehow the correlation between Musk’s tweets and further Bitcoin spikes or dips, looking at the tweets as series of events is necessary.
Elon Musk has got over 47 million followers on Twitter. Since this social network has become a major platform for all crypto-related communication, his influence has become inevitably big. It is estimated that he can make more profit from Bitcoin than from Tesla cars selling.
Researchers have already performed studies trying to relate Elon Musk’s tweets to cryptocurrency markets’ activity. Some of the findings include interesting points which traders might want to consider if they want to catch the wave of the worldwide waves generated by the richest man on Earth.
- The significant effect on the sudden Bitcoin price spikes is mainly observed during the most active trading hours. This observation might lead to a conclusion that if he was tweeting when most of his active followers were sleeping, the effect would be much weaker.
- Musk’s tweets result not only in the BTC to US dollar rate and excessive buying of the BTC but also in the overall market activity. This might suggest that people tend to use Elon’s tweets as an incentive to make more profits on the day trading, including trading with derivatives.
- The tweets of the self-proclaimed Technoking of Tesla have a particular timeframe during which their effect is present. This means that you can be either too early or too late into the Elon Musk effect on the crypto markets.
Considering all the factors stated above, it is clear that whether or not Musk aims to speculate on Bitcoin, he does have some significant impact on the markets. A lot of traders across the world use this opportunity to gain more on the highly volatile and liquid markets. Other investors who don’t like the high risk, prefer to hodl the Bitcoins for long till the better times.
A Joke Or Not?
Another cryptocurrency that has been actively promoted by Elon is the famous meme-inspired Dogecoin. Seems like nobody took this coin seriously until its market cap reached the mark of $50 billion which is much more than most of the S&P500 companies listed on NASDAQ and other publicly traded exchanges. This trend clearly shows that cryptocurrencies start to attract more attention of large investors trying to diversify their risks and hedge their portfolios from the risks inherent to the traditional financial markets.
Dogecoin has shown insane growth after Elon’s tweets, unseen before even in the case of Bitcoin. It has soared 600% up and more as the community tried to push the coin up to $1 dollar and “to the Moon”. Some people have reported they made millions of dollars of DOGE. But is the same going to happen to Bitcoin which is more widely adopted by DOGE?
The hopes to get rich overnight have plummeted a bit after Elon Musk backing down from his love for Bitcoin and stating that Tesla will no longer accept BTC payment for their electric vehicles. The reason is the environmental harm of the Bitcoin mining centers. After the tweet about this news, the Bitcoin price dipped more than 17%.
Previously, Tesla sold some BTC and gained about $101 million on this operation. Right now, some analysts suggest that Musk is interested in Bitcoin going down again so that he could buy it cheaper. Then, he might go for another round of the oldest crypto’s promotion. However, others suppose that Technoking might be interested in holding Bitcoin and not doing anything with it anytime soon. At least this can be true during the process of fighting for cleaning the environment of New York where some of the most powerful mining farms are located. The bill proposed by one of the Congressmen is aimed at shutting down the mining in New York for three years. If that occurs, the BTC will become more scarce due to the decreased production. As a result, the prices could soar again or, on the contrary, do down again due to the negative sentiment of the audience.
Will Musk Stimulate Bitcoin Growth Again? – Author: Mary Ann Callahan
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