Elon Musk, currently the world’s second wealthiest man, has often made statements that have been considered forward-thinking. But they have also been controversial at times. His latest obsession seems to be cryptocurrencies.
Elon’s foray into the cryptocurrency market began with him tweeting on Jan 29 a picture of the Dogecoin dog on the faux cover of a magazine “Dogue.” This tweet set off a rally for Dogecoin driving the price up 300% within a few hours.
On the same day, he also changed his Twitter bio to read “Bitcoin” with a tweet that followed, saying, “In retrospect, it was inevitable.” The tweet caused the price of Bitcoin to surge 12.3% as it confirmed to many investors that Bitcoin could be a legitimate investment since the world’s richest man was vouching for it.\
Twitter’s crypto crusader
On February 4, he sent out a series of tweets about Dogecoin, which sent the price of DOGE flying again to $0.06 from below $0.03 before the tweet. In one of the tweets, he also called Dogecoin “the people’s crypto,” causing more hype around it.
However, on February 8, Musk finally put his money where his mouth was when Tesla announced in an SEC filing that they have bought $1.5 billion of Bitcoin and that they even plan to accept it as payments for their products.
This move sent the cryptocurrency market into a frenzy. Bitcoin grew to reach its then all-time high of $48,300, supported by BNY Mellon’s decision to enter the cryptocurrency markets as a custodian and Mastercard’s announcement they would support payments of select cryptocurrencies on their network.
Although the latter two are also significant moves for the crypto community, Tesla’s decision to buy BTC hogged much of the mainstream and crypto community spotlight, indicating that the world’s second-richest man might just be the most influential man for the crypto markets.
Bitcoin surging $7500 on the day of Tesla’s announcement marked the largest positive daily Bitcoin candle in history.
Elon’s interest in Dogecoin led him to buy some dogecoin for his son so he would become a “toddler hodler,” revealing his long interest in that particular coin. Dogecoin is also benefiting by being listed on various exchanges to accommodate the mainstream hype from retail crypto investors. The latest exchange was Crypto.com, which listed Doge on its exchange on January 29 following Elon’s first endorsement on Twitter.
In an instance that shows how Elon and Tesla have impacted the crypto markets, Crypto.com has even announced a “Tesla Bitcoin Lucky Draw” for their app users. Specifically, those who trade in Bitcoin between Feb 9 and March 8 are eligible to win Tesla Models, S, X, Y and 3 through a lucky draw. Lucrative offers like this are bound to push retail interest in Bitcoin and other cryptocurrencies.
Elon’s impact not limited to BTC and Doge
As ByBit has highlighted in their official blog report, “The weekly recap – The Elon Effect,” Elon’s impact through Tesla‘s investment isn’t limited to Bitcoin alone. The effect is observed in the second most prominent crypto asset, Ether, riding on Bitcoin’s momentum and CME’s launch of Ether Futures reached its then all-time high of $1870 just a few days after these announcements. Ethereum’s 2.0 phased launch is also a catalyst for investors believing in the blockchain’s fundamentals.
Tesla’s investment impact extends to altcoins, Decentralized Finance (DeFi) assets, the crypto futures markets, and even the on chain metrics as pointed out in Bybit’s blog. The number of active addresses is the best way to evaluate a cryptocurrency network as per Metcalfe’s law, which states that the value of a network is proportional to the square of the number of users in the system.
Using this as a basis, it is evident that aside from the price surge, Bitcoin as a network saw a valuation spike on the day Tesla made their announcement with the active addresses reaching $1.2 million on that day.
Although, crypto optimists consider the current dip in the value of BTC and ETH to be a healthy price correction. There are also speculations that Elon might be responsible for this dip that caused the BTC’s price to go from a high of above $58,000 to currently trading around the $45,000 mark.
These speculations are based on a tweet that Elon sent in a conversation with Gold loyalist Peter Schiff, where Elon stated that “That said, BTC & ETH do seem high lol”. The prices of Bitcoin and Ether tanked two days later on Feb 22, now also known as “Bloody Monday.”
An email saying you have gold is not the same as having gold. You might as well have crypto.— Elon Musk (@elonmusk) February 20, 2021
Money is just data that allows us to avoid the inconvenience of barter.
That data, like all data, is subject to latency & error. The system will evolve to that which minimizes both.
How much truth is there in these speculations can never be said for sure, but the fact that Elon Musk’s impact on the crypto markets is enormous and is ever-increasing is undeniable.