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The Musk Effect – Crypto and Elon Musk

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If you are a crypto trader and have been watching the charts, you’d know that Elon Musk’s tweets have had a lot of impact on crypto prices.

As an example, when Elon Musk tweeted about accepting Dogecoin (DOGE) for buying Tesla cars, the price of DOGE skyrocketed. Since then, many other cryptocurrencies were also accepted as payment at Tesla outlets. The acceptance of cryptocurrencies by large companies like Amazon and Microsoft has also helped in making them more popular among mainstream investors and traders.

Elon Musk’s tweets have made cryptocurrencies a trendy topic of discussion and this results in a jump in the price of Bitcoin. The CEO has been skewered for his tweets about Bitcoin and cryptocurrency, especially after he dubbed himself the “Dogefather” at Clubhouse. 

Most notably, he also changed his Twitter bio to #bitcoin in January 2021, sending it up as much as 20 per cent before trading was temporarily suspended. Musk said in February 2021 that Tesla had bought $1.5 billion worth of bitcoin, causing its price to surge 15 per cent in a matter of seconds

Let us look at some other major events that have created a major impact on the price of cryptocurrencies, directly through the actions of Elon Musk, the man behind the surge and fall of crypto.

Changed his Twitter bio to #bitcoin

On Jan 29, 2021, Elon Musk took everyone by surprise when he unexpectedly changed his Twitter bio to read: #bitcoin. In a matter of hours, the price of Bitcoin rose from around $32,000 to over $38,000, increasing the asset’s market capitalization by $111 billion. Although Musk didn’t provide any further explanation for his adoption of Bitcoin.

Tesla buys $1.5 billion worth of BTC

Musk said in February that Tesla had bought $1.5 billion worth of Bitcoin (BTC), causing its price to surge 15 per cent in a matter of seconds. He went on to tweet about crypto since February 2021, including an ominous tweet in which he said “I hope they don’t blow up.” The tweet caused another minor surge in Bitcoin prices.

Bitcoin jumps to the $40K mark on Musk’s tweet

You may have heard that Elon Musk tweeted about Bitcoin in 2021. This caused the crypto currency’s price to surge, rising from $13K to $38K in just a couple of days. While Musk deleted his tweet and explained that he had simply been “sarcastic,” it was too late: many people had already sold their Bitcoin, causing the price to fall back down again. It seemed that some newbie investors were scared off by Musk’s comments and decided not to invest in Bitcoin after all. 

Musk tweets on taking Tesla private

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On July 15th Elon tweeted that he was considering taking Tesla private at $420 per share because of funding challenges to take the company private. This tweet led to an investigation by regulators into whether or not Elon potentially violated securities law by sending out tweets that could affect stock prices. 

The following week after his initial tweet, Elon tweeted again stating that funding had been secured and that he would be staying with Tesla as CEO. This caused even more confusion since no one knew if it was true or not until they saw an SEC filing later that day confirming funding was indeed secured from Saudi Arabia’s Public Investment Fund (PIF).

He also said that he was considering taking Tesla private and that he would create a website where people could “rate their favourite [cryptocurrency] exchanges and share their experiences” — which drew criticism from many in the space because it seemed to target Coinbase specifically. This caused a stir in the market and the prices went soaring.

Dogecoin accepted for Tesla Merchandise

Elon Musk is known for making random jokes on Twitter. This time, however, it wasn’t just any random tweet: Elon Musk announced that he would be starting accepting Dogecoin as a payment method for purchasing electric vehicles from Tesla Inc., which made people believe that there might actually be some truth behind his words this time around.

Dogecoin prices skyrocketed when Elon Musk announced in Jan 2022 that he will be accepting Dogecoin for buying Tesla merchandise. Elon Musk tweeted that he would start accepting Dogecoin as a payment method for his Tesla merchandise. It was a joke but many were hopeful that it could become reality and it did happen! The cryptocurrency community was happy about the news and this led to an increase in the value of Doge by more than 50%.

Conclusion

With that out of the way, the future of Elon Musk’s relationship with the cryptocurrency space is complicated. On the one hand, he strongly supports the crypto space’s ethos of decentralization and financial freedom. However, Elon has been cautious in commercial crypto adoption, with Tesla discontinuing BTC payments as an example. Similarly, he believes that investing in real products and services is preferable to crypto investments.

However, one of the benefits of Elon Musk’s involvement in the cryptocurrency space is the rise of utility-focused projects. One of the reasons he has singled out Bitcoin as an ineffective financial asset is its lack of utility. Furthermore, Tesla is going all-in on green energy, which is transforming the mining landscape. This is where projects like IMPT.io become highly potential assets, as one of the greenest cryptocurrencies in the space at the moment. Investors, however, should navigate the markets safely considering the bearish sentiment that has clouded the industry for the past couple of months now. 

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