By How the World’s Richest Man Negatively Influences the Crypto Market by Controlling the Rise and Fall of Cryptocurrencies
Cryptocurrency has become a hot topic in recent years. Some consider it to be a Ponzi scheme, but still many believe it will replace traditional paper notes and become the currency of the future.
Currently, only 33% of the activity involving Bitcoin—the most well-known cryptocurrency—is related to purchasing goods and services.
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That means right now cryptos are not serving the purpose they were intended to.
Furthermore, most of the activity involving cryptos includes making a profit by buying stakes with the intention to sell them in the future on the speculation that someone else is also willing to buy them.
Many want the digital currency to be used entirely as a form of money instead of being used in this manner.
But one man, Elon Musk, might be making it difficult to achieve that.
Many call Elon Musk “The Man with the Greatest Influence on The Market of Crypto”.
Even though the rise and fall of cryptocurrency are affected by many factors, Elon Musk can single-handedly control the crypto world with his actions—mainly his tweets.
His obsession with tweeting about cryptos first started in 2021. And every single one of his tweets related to crypto has been able to move the entire market.
Elon has abused this influence to manipulate the prices to earn billions and as a result, has become an enemy of the growing cryptocurrency market.
In this TabStocks article, we will dig deep into how the world’s richest man is threatening the future of cryptocurrencies.
How Elon Musk uses his Twitter influence for financial purposes
The CEO of SpaceX and Tesla is already infamous for manipulating the prices of many stocks including Twitter.
Unfortunately, the crypto market is also not safe from this ‘Elon Effect’.
The most common way in which the CEO of The Boring Company uses his influence is by making the prices fall to buy stocks at a lower price and then making them go up to earn profits.
He did the same with Bitcoin back in 2021.
Manipulation of the Market to Raise the Price of Crypto
In February, Tesla—the company Elon Musk is the CEO of—disclosed that it had invested $1.5 billion in Bitcoin.
The move was aimed at maximizing profit on the cash that was owned by the company but not being used.
On 24 March 2021, the CEO of Tesla through his Twitter post informed the world that their customers could now buy the company’s products using Bitcoin.
This single tweet increased the value of Bitcoin to the height of $64,000.
Earning Profit
Due to this rise in prices, Tesla’s $1.5 billion investment was worth $2.4 billion near the end of March.
In the last days of April 2021, the company disclosed that it had sold some of its Bitcoin stakes and made a net profit of $101 million.
Reports suggest Tesla, in general, has made more profit through Bitcoin than by selling electric vehicles.
Decreasing the Prices
On 13 May 2021, Tesla went back on its decision saying that the company will stop accepting Bitcoin because of the non-eco-friendly processes involved in its mining and transactions.
According to Digiconomist, one Bitcoin transaction consumes more power than one American household does in a single month.
According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin mining operations worldwide use nearly 90 tetra watt hours annually.
Consequently, the price of the currency dropped by 10-15%.
In short, what the CEO of Tesla did was buy some Bitcoin, raise its price and sell the Bitcoin at the new increased price to make a profit for the company.
On analyzing these actions, we find something fishy.
Elon Musk promotes cryptos a lot, and he obviously knows how they work, how cryptos are mined, and the entire process involving their transaction.
Did the CEO of one of the world’s biggest companies and such a learned man not know Bitcoin was not safe for the environment?
Well, maybe he really was not aware of this information. Let’s give him the benefit of doubt.
But the suspicion remains
Did no one at Tesla bring this issue up when the decision was still under consideration?
Did the company not thoroughly research cryptocurrencies before investing $1.5 billion in Bitcoin?
Is this how big decisions, that are capable of moving markets, are taken in huge corporations?
Was no one at Tesla worried about the impact of Bitcoin on the environment before the decision was made?
Was this just an innocent mistake or was it deliberate?
An attempt to manipulate the market in the direction that would make the company some profit?
If Elon Musk was so concerned about the negative impact of Bitcoin on the climate, he should have never allowed his company to make the investment in the first place.
How Does Elon Musk Pose a Threat to the Crypto Market?
The effects of Mr. Musk’s actions put cryptocurrencies at a disadvantage in the following ways:
Threat to the decentralized feature of Cryptocurrencies:
The developers of crypto developed the digital currency with the aim that it will be resistant to the influence of any person, government, or other entity.
This feature of a currency is called the decentralized feature. And this property of crypto is what attracts people to it.
But, the fact that the value of the currency can significantly change just because a billionaire called it a hustle on a skit of Saturday Night Live, raises doubts about the resistance of cryptocurrencies to external factors.
Increase the Lack of Trust in the Market: People invest in stocks that remain stable instead of bouncing to extremes like Bitcoin and other cryptocurrencies do.
Musk’s activities have certainly made investors look at the market in a new light.
The volatility of the market has decreased their confidence in it.
They no longer see it as a valuable investment, instead for some it has become a game of gambling and betting where profit and loss are determined by the tweets and actions of some influential people.
It would, of course, not be a surprise that this has made many people hesitant to invest in the market.
Invite Dangerous Crypto Regulations:
Crypto is already in the bad books of major economies of the world.
They see it as a danger to their currency and a threat to the authority of the central banks.
The easy manipulation of the market by the CEO of Tesla may grab the unnecessary attention of lawmakers who do not want to miss out on any chance to crack down on cryptos.
The lawmakers could just ban the use of crypto like China, Turkey, Bolivia, Nepal, Algeria, and Nigeria previously did or they could start restricting its use or start taxing cryptocurrency transactions.
Regulations that can strengthen the market are welcomed, just not the ones that discourage activities related to cryptos.
Open Doors for Scams in the Market: The concept of scams is not alien to the crypto market.
According to the Federal Trade Commission, since the start of 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams.
Many people have reported being scammed by people impersonating Elon Musk and giving fake giveaways on social media platforms.
Back in 2021, the BBC reported that one woman lost £9,000 to a Bitcoin scam she thought was a giveaway by the CEO of SpaceX.
Even though these scams are not intended by Elon Musk, one is compelled to ask if the victim fell for the scam because of the name associated with it, Elon Musk—one of the biggest supporters and promoters of cryptocurrencies.
An increase in scams may also make investors reluctant to invest in the market.
Prevent Businesses from Dealing in Crypto:
Crypto market is unpredictable and volatile. There is no doubt about it.
But Elon Musk’s influence over it provides it with more volatility.
Businesses, especially small ones that want to avoid risks, are already reluctant to accept Bitcoin.
Elon Musk’s games with the market give them many more reasons not to.
Why Does Elon Musk Have The Power to Influence and Control the Crypto Market?
If you or I were to tweet about crypto in the same manner that the CEO of Neuralink does, it would never put the market in a frenzy. Why? What gives Elon this position of power over an entire market?
Well, the short answer is that he is ELON MUSK.
The long answer would be:
Elon Musk has great influence over the people. He is the CEO of two of the most well-known and biggest companies in the world—Tesla and SpaceX.
He also has a large Twitter following (more than 100 million as of July 2022). He is also one of the few billionaires liked by the people.
Due to all these factors, people trust his judgment and give value to his opinions and views. As a result, his words and tweets have an impact.
Cryptocurrency is still a fairly new concept.
The market is new, volatile, and easy to manipulate. One opinion of an influential man like Elon Musk can put the entire market in a frenzy.
It can make investors sell their shares out of fear of a loss or buy shares to get a profit in the future.
If in the near future the market strengthens itself, it is highly possible that Elon Musk will lose this position of power. Some believe that is already happening.
What Should Elon Musk Be Doing for the Crypto Market instead of Manipulating It?
It would be wrong to suggest that Elon Musk should stop posting anything even remotely related to Bitcoin.
After all, he has so much influence over people and he could use it for something that benefits the market.
A better suggestion would be to consider taking the following steps instead of manipulating the prices:
Instead of using Bitcoin to make profits, as the CEO of Tesla, he should enable the company to make profits by doing what it is supposed to do—selling electric vehicles.
He should consider investing in improving blockchain technology—the technology on which cryptocurrencies operate.
His influence may allow lawmakers to take a less threatening stance toward cryptocurrencies.
Lawmakers may make regulations that strengthen the market and make the possibility of governments using Bitcoin for certain purposes more likely.
He should consider making the cryptocurrency environment friendly. (which he is currently doing actually)
All in all, if the CEO of Neuralink and Solar City wants, he can play a big role in making cryptocurrencies the mainstream method of payments.
Conclusion
In all this ocean of criticizing Elon Musk, let’s make one thing crystal clear.
This criticism is meant to be constructive.
He should take a step back, evaluate the effects of his actions and think about their negative impact on the crypto market instead of thinking about the profits these actions bring.
The founder and CEO of The Boring Company is a great supporter of cryptocurrencies.
In fact, he has already said that he expects crypto to be the currency used on Mars.
Furthermore, Elon Musk’s goal to make humanity a multi-planetary species cannot be achieved with paper money.
Paper money provides challenges that are nearly impossible to solve or avoid.
In other words, his dream also relies on the stability of the market. If he keeps manipulating it for some personal gains, his dream may be pushed farther away.
Elon Musk poses a threat to the crypto market and a weak crypto market, in turn, poses a threat to him.
If the world’s richest man continues to abuse his influence and keeps on playing games with the crypto market, the goal of crypto to change the finance system of the world; replace fiat currencies; and ensure privacy and security, will remain a dream, and may never be able to manifest itself in the real world.
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