Impact of Elon Musk on the Cryptocurrency Market

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Just two decades ago Elon Musk was an unknown person. Today, we are talking about one of the richest and most influential people in the whole world, alongside Bill Gates. One of the ways we can see how influential this person is is to take a look at his Twitter account. You will see that Mr. Musk has over 50 million followers.

For those who don’t know, we are talking about the founder of Tesla, the Boring Company, and other well-known companies. Recently, Elon Musk tweeted his opinion about the cryptocurrency market. Immediately after his tweet, Bitcoin’s value started plummeting. From April to June, it lost almost 50% of its value. Many don’t know that this isn’t the first time for Musk to have this kind of impact.

However, it is the first time he had a bad influence. Two months ago, his positive opinions have made this cryptocurrency’s value rising. But this is not the only way he has impacted the market. Certainly, we can see that this relationship hasn’t become interesting in 2021. It started a couple of years ago. Now, let’s take a look at what kind of an impact did Elon Musk had on the cryptocurrency market. Buckle up, and let’s go.

Source: Medium

What is Crypto Market?

Before we get into the story, we need to have some solid grounds. The concept of cryptocurrency means that this is a store of value, completely decentralized from any form of authority. It does all the work on its own. When you know this, you know that no government in the world can have control over it. That’s why official institutions are so skeptical about this concept.

How are they decentralized? Well, cryptocurrencies are running across a network of computers. At the same time, you can store them inside your e-wallet, which means you can sell or send them to another e-wallet. It is done through crypto exchanges, like cryptoengine. Now that we know all of this information, the question is, how is it possible that one person has so much influence on the market?

Source: unsplash.com

The Background

As we’ve said, this is not the first time Mr. Musk talked about cryptos, namely Bitcoin. The adventure started back in 2014 when he described BTC with the words “probably a good thing”. When that happened, many people started theorizing that he was the one behind the whole project. However, he declined these allegations shortly after. A couple of years later, he expressed interest in this concept.

In 2019, he decided to invest in BTC. Namely, his company, Tesla, has invested roughly $1.5 billion in it. At the same time, he said that his companies will start accepting this method of payment. Many people have perceived this as a sign to invest in it as well. These investments resulted in BTC reaching a record value of $61,000 in April 2021. However, this is when things started going down.

Source: indiatimes.com

May 2021

Only a month later after the record value, Tesla’s management has decided to sell 10% of its BTC. While this doesn’t seem like much when you take a look at the market, it had a negative impact. The impact manifested in many investors from all over the world started panicking and selling their coins. However, the entrepreneur stated that the company selling 10% was just a test of liquidity.

A couple of days after this happened, he posted a tweet where he stated that he questions the crypto’s impact on the environment, mainly in the mining process. Plus, his companies have decided not to accept it as a legal method of payment. Without any doubt, this was the reason for the massive drop BTC’s value experienced in just two months. From $61,000 in April, it dropped down to $30,000 in June.

However, this is not the end of his impact. A couple of days after this statement, he said that he is interested in exploring the possibility of making the mining process environmentally friendly. After this statement, the BTC’s price rose by 19%. From that point, the value dropped to less than $35,000. Now, it is around $33,000.

Source: Asia’s Tech News Daily

Musk and Dogecoin

Since BTC is the most popular crypto in the world by far, many people are not informed about others, except maybe Ethereum. One of these less-known digital currencies is Dogecoin. It’s not so known that Elon Musk had an impact on Dogecoin. However, it needs to be said that even though his opinion about Dogecoin can be called satirical, it truly had a big impact on its worth.

For instance, its worth was almost non-existent when Musk started talking about it and its potential. In a relatively short time, Dogecoin has risen to $0.30, which was big growth at the time. However, when he expressed his concerns about its modus operandi, the worth has plummeted and is now only a fraction of $1.

At the same time, we can see that some crypto developers have stated that they would like Elon Musk to help some of the less-known digital currencies to receive adequate help, by bringing experienced developers. We will just have to wait and see what will come out as a result of these stories.

Source: Medium

Will it Happen in the Future?

As you can see, tweets from a Twitter account have succeeded in having a large impact on the whole market. However, we can see that BTC and others have started picking up their value after this blow. Maybe you didn’t know, but a lot of other cryptos have suffered a massive loss. In an interview, Vitalik Buterin, one of the creators of Ethereum has stated that the market will build its immune system in the future.

The Bottom Line

Despite the market being decentralized, an entrepreneur’s tweets have managed to make a couple of impacts that shook it completely. While this is not something that should happen in theory, we can see that they are not as decentralized as it was believed. After all of this happened, we heard that developers have stated that they will do their best to provide the market with immunity of its own.

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