Is he actually manipulating them? It is said that he first loved them, then doubted them.
Billionaire tycoon, Tesla’s CEO, and SpaceX’s boss- Elon musk has often endorsed cryptocurrencies on social media, he has tweeted a lot about them but when things started changing, doubts and accusations made by certain people got claimed and many changed their opinion whether is he actually a supporter? Especially after the recent market crash.
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The Impact of the Musk effect
Every time Musk mentions the cryptocurrency, a surge followed by an eventual downfall occurs in the prices of the cryptocurrency. People have more than just co-related the phenomenon, they’ve even remarked it as: “The Musk Effect.”
Over the weeks, the response to Musk’s tweets has become increasingly negative – with people blaming him solely for the rise or dip in prices, saying it cost them a loss and he’s ‘manipulating’ markets. Some took this a step further – by making a cryptocurrency called Poocoin, solely dedicated to stopping Musk: $StopElon. The objective of this is to stop Musk who allegedly manipulates the crypto market.
He continues to change his statements and sees the market as a toy, just like the narcissistic billionaire he is and always will be. Previously, Musk had a track record of recklessness, having paid a $20 million fine to the United States Securities and Exchange Commission in 2018 for misleading tweets about Tesla stock. Whether out of bounds or not, Musk’s foray into the crypto world sheds important light on how token markets work as well as the larger questions of market influence in the social media age.
SOME INSTANCES OF MUSK’S MANUPLATION AND ITS EFFECT
• It all started when Tesla first announced it would accept bitcoin as payment on Feb. 8, at the same time it announced it was buying $1.5 billion worth of cryptocurrency. That announcement helped push the price of bitcoin over $50,000 for the first time ever. Later, Musk announced Tesla would no longer accept bitcoin for payment, over environmental concerns, particularly its vast consumption of electricity produced from polluting substances like coal. Bitcoin plunged nearly 10%.
•In an interview he also mentioned, that cryptocurrency may be the future; he said that “There is a good chance that crypto is the future currency of the world. Then the question is which one is it going to be? It could be multiple,” he said. Then he explained how Dogecoin was invented as a joke, essentially to make fun of cryptocurrency, and that’s the irony. “That the currency that began as a joke, is now a real currency.” But later in one of his videos, he mentioned that “Don’t invest your life savings into cryptocurrency”. That’s unwise.”
• On the evening of May 13, Tesla and SpaceX CEO Elon Musk tweeted, “Working with DOGE devs to improve system transaction efficiency.” The dogecoin cryptocurrency’s price immediately increased by 14%. However, when he referred to the meme-coin as “a hustle” while hosting “Saturday Night Live” on May 8, DOGE dropped by more than 35%.
Data from Statista shows that- The price of the cryptocurrency based on the famous internet meme soared to new heights in early 2021, with growth rates exceeding those of Bitcoin. Between January 28 and January 29, Dogecoin’s value grew by around 216% to 0.023535 U.S. dollars after comments from Tesla CEO Elon Musk. The digital coin quickly grew to become the most talked-about cryptocurrency available in the market and not necessarily for its price because the prices of Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and several other virtual currencies were much higher than that of DOGE but because of the MUSK EFFECT.
Kristin Boggiano, president of digital asset investment firm CrossTower, said the problems facing cryptocurrency are bigger than just tweets of one electric car executive. But she said “there is clearly a conflict of interest” regarding Musk’s role in the market. “He’s been advising dogecoin, and clearly has an interest in dogecoin and he is making comments about bitcoin,” she said. But she also believes that though Musk “may influence retail, I don’t think he has the ability to influence institutional clients”.
This shows one minority side of the market opinion where people don’t purely blame Musk for the market changes whereas the other side includes people who aren’t happy and clearly blame Musk for manipulating the market.
FOX Business’s Stuart Varney during his latest “My Take” on “Varney & Co.” argued that Tesla CEO Elon Musk is “manipulating the multi-trillion-dollar crypto market” and Musk’s effect on the market is ‘worrisome’.
He took a deep dig in him and stated that a person who ranks right up there with Steve Jobs, why would on earth is he fooling around with a joke coin, otherwise known as dogecoin? During his appearance on “Saturday Night Live,” musk dismissed doge as ‘a hustle.’ But later he offered it some support, suggesting it would ‘improve system transaction efficiency.’ That night Dogecoin gained a 25% increase in the rate in some minutes!
Also, months ago his car company had bought 1.5 billion dollars worth of bitcoin. Then he re-treads them, suggesting that crypto mining is bad for the environment!
First, he loved bitcoins then retreated them. Next, he dismissed dogecoin then promotes them! What’s going on?
According to Varney’s opinions, he says that Elon wants to be the man of the future. He wants to be a part of the next big thing. He wants to run the next big thing. And he believes cryptos are the future. That’s why he makes so much noise in the crypto market.
Secondly, Varney also feels that he’s a natural-born showman and he uses his talent and his gigantic wealth to attract attention. He loves it. And it works. He’s a colourful character, who dominates the news and moves the markets according to his wish. But Varney says that what he’s doing to the financial markets is actually very sorry and worrisome.
I think, somewhere or the other it is true that cryptos are the future of the market. If not capturing the whole market under them but will surely be an important part of the market.
But what does it tell you about the financial system and where does it stand when a multibillionaire can put out a couple of tweets about a joke cryptocurrency and move the market, rolling hundreds of billions of dollars?
It tells us about his worth and goodwill in the market and how he is using social media as a weapon mixing it with his manipulation skills, combining it to make a power with which he can move the whole market.
That power has been very profitable for Tesla, in ways that the conspiracy-minded might find a suspect. After the bump generated in part by its own moves, Tesla sold about 10% of its bitcoin cryptocurrency for a $101 million profit, improving its first-quarter earnings results by nearly 30%.
To some extent, Tesla and Musk’s power to move markets is no different than that of veteran investors like Warren Buffett. They’re able to lead markets because people trust their judgment.
Blockchain technology may well be a big part of the future. But when a joke is promoted as an investment, that’s where the market loses.