A fundamental feature of the Bitcoin market is its decentralization. This means, among other things, that an individual has no influence on the fate of the cryptocurrency. However, when adoption is still at an early stage, this condition is not necessarily fulfilled. This is best proven by the figure of Elon Musk and the power of his statements.
Elon Musk, Tesla and Bitcoin
However, let’s start at the beginning by introducing Musk himself. A brilliant businessman, founder of companies like SpaceX and Tesla. An entrepreneur who for many years has been in the top of the top of the richest and most influential people in the world.
Many market analysts predicted that only a matter of time is his involvement in the cryptocurrency area. And so it happened. On January 29, 2021, he changed his bio on Twitter, putting in it only one word. It read “Bitcoin”. On that day, the world experienced a great stirring and by way of speculation, the exchange rate of the king of cryptocurrencies shot up abruptly yet temporarily. By market participants, the candle on the chart corresponding to the price movement that day was dubbed the Elon Musk candle. Just a few days later, an announcement was made that Tesla had made a $1.5 billion purchase of BTC. This was a confirmation of Bitcoin’s usefulness, which consequently put the king of cryptocurrencies into a dynamic upward movement. However, the real milestone came with Tesla’s declaration to recognize Bitcoin as a payment method for the cars produced by the company. Moreover, it was also declared that the Bitcoins held by Tesla will not be sold and exchanged for cash. Such a far-reaching adoption, in one of the highest valued companies in the world could not go unnoticed, which consequently was the fuel for further coin increases.
Manipulation of Dogecoin’s exchange rate
However, it was not Bitcoin that was Elon Musk’s favorite in the cryptocurrency market. Dogecoin, a coin created as a parody of the king of cryptocurrencies, has become Elon’s favorite when it comes to speculation. It has become a regular occurrence for the Tesla founder to publish short posts supporting the meme currency on his personal Twitter profile. As a result, Dogecoin was rapidly breaking out to new price levels each time it was mentioned, while also noting new ATHs.
This was an obvious manipulation of the market, which had a rather unhealthy effect on people who were newly joining it. The case also interested the American SEC, which decided to examine the legitimacy and intentions of Musk’s actions. However, the interested party did not care about this fact and continued to play with the market. Among his actions, some see support for Cardano, which occurred through the February change of Elon Musk’s avatar to “fork in the road”, which is part of the description of this very project on his official website.
As long as Elon Musk spoke positively about the cryptocurrency market and triggered price increases, he was viewed very favorably by the community. However, the situation has changed dramatically.
May 13, 2021 and its implications
A turning point in the world of cryptocurrencies. Elon Musk again through his Twitter profile posted that Tesla was suspending its ability to accept payments in Bitcoin. The reason was Musk’s statement suggesting the need to use a very large amount of electricity to process transactions on the BTC network. In his opinion, this energy does not come from renewable sources, but from fossil fuels, which contributes to a significant increase in carbon dioxide emissions into the atmosphere. This information caused panic and a sudden sale of coins. However, the declaration was supplemented by a mention that Tesla does not intend to sell its Bitcoin, and that it will consider using other cryptocurrencies as a payment method, provided that their electricity consumption is less than 1% of the energy used by the Bitcoin network.
A sudden turnaround
The situation has sparked a public discourse about the ecology of the network of the largest of the cryptocurrencies. Many people believe that Elon Musk has pointed out a problem that should be solved as soon as possible. However, the vast majority of market participants have changed their attitude to the creator of Tesla from very positive to extremely negative. Thus, the disadvantages of such a strong influence of one person on the crypto market were recognized. On the one hand, this contradicts the idea of decentralization, but on the other hand it shows how early in the adoption stage we are at the moment.