Concerns about Elon Musk manipulating Bitcoin price

According to experts, Musk's influence on the cryptocurrency market is far from over as Bitcoin's fate is still tied to the Tesla CEO's tweet.

Elon Musk has helped make crypto more mainstream in the eyes of Wall Street investors. However, now each of Musk's shares on Twitter scares them.

Bitcoin price has been blown by about 25% in a week, partly due to Musk's attention-grabbing tweets as well as the harmful effects of Bitcoin mining, and later in favor of Dogecoin.

The Tesla CEO has always been enthusiastic about crypto, but his latest tweets caused turmoil in the sector and revived the debate over whether the fledgling asset is a serious investment. full no.

Tesla CEO Elon Musk.  Photo: Bloomberg

Tesla CEO Elon Musk. Photo: Bloomberg

According to Vox , while Musk's tweets aren't necessarily posted for the Tesla CEO's own benefit, it can greatly influence investors in crypto. They also question the solidity of a market that is easily swayed, especially as individual investors increasingly flock to cryptocurrencies.

Can Bitcoin become an inflation hedge and replace gold with today's volatility? Or is it simply a joke on Twitter with the second richest man in the world?

GAM Holding, which manages 124.5 billion Swiss francs ($138 billion), thinks the unpredictable volatility of cryptocurrencies is proving a major downside.

"Its volatility is so great that clients can lose focus from their investment goals. It's often driven by tweets rather than fundamentals," said Julian Howard, head of analytics. This company's multi-asset law commented.

Previously, Musk had to resign as Chairman of Tesla , and the US electric car company was fined $ 20 million by the SEC for failing to control Elon Musk's speech on Twitter in 2018. At that time, Musk was accused of giving out information. confuse investors to push up Tesla stock price and impress girlfriends. He wrote on Twitter that he had enough capital to buy back and unlist Tesla, at $420 a share. Usually, the share price will match the buyback price a company announces. Because investors think the deal will be completed and the value of the company will approach the announced number.

Ahead of this month's "roller coaster," cryptocurrency adoption tends to increase after the turning point where Tesla bought $1.5 billion worth of Bitcoin. At the time, Musk announced that he would allow customers to pay for cars with Bitcoin and keep the currency on Tesla's balance sheet.

The first move by a major company has raised expectations that guest businesses will follow suit and cryptocurrency as a conventional method of transaction. Goldman Sachs and Morgan Stanley have also announced plans to offer customers crypto-related services.

These moves caused the Bitcoin price from $29,000 in January to surpass $60,000 last month. After being turned away by Elon Musk recently, this coin has dropped below $43,000 and has just lost the $40,000 mark .

Bitcoin price volatility after Elon Musk's tweets.  Photo: Vox

Bitcoin price volatility after Elon Musk's tweets. Photo: Vox

Some analysts say the market still looks precarious, especially as Bitcoin's fate becomes tied to Elon Musk 's tweets . According to Galen Moore, director of information and data at Coindesk, Bitcoin's volatility led by Elon Musk last week also raises uncomfortable questions about price manipulation. After Musk's tweets, it's impossible to really tell whether the billionaire is buying or selling Bitcoin.

Cryptocurrencies like Bitcoin are not subject to US Securities laws and are less subject to scrutiny than stocks. Last week, the US Securities and Exchange Commission (SEC) warned of a lack of regulation and the potential for fraud or manipulation related to Bitcoin.

"I think the market demand will decrease in the near future. Firstly because of the loss of momentum from a technical perspective, and secondly due to the over-sensitivity to environmental issues," said Felix Dian, founder of the fund. cryptocurrency MVPQ Capital said. Bitcoin doesn't have fundamentals like profit flows or interest payments that fix the value of stocks and bonds, so it's inherently a speculative bet on market trends.

Earlier this week, the US Federal Trade Commission said consumers were scammed of $2 million by people impersonating Elon Musk. This shows just how strong Musk's influence on the crypto market is, creating both opportunities for impostors. Vox said that Musk's influence on the market should not be expected to disappear anytime soon as cryptocurrencies grow in popularity and Musk's empire grows.

Meanwhile, crypto insiders predict the volatility caused by Musk is temporary and will end soon. "We have a longer-term view and investors would be right to take a similar view. What matters is whether we think this asset class is going to last. The answer is yes," the CEO said. Greg King of crypto hedge fund Osprey Funds said.

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