It’s hard to be a godfather! Is Musk going to take the blame for the Bitcoin crash?

Four months ago, Musk fanned the flames of a frenzy on the way to doubling the price of the currency, and now he’s in the same position, contributing to its collapse.

At the end of January, he first added “Bitcoin” to his Twitter profile (Bio), and less than 10 days later announced a $1.5 billion investment in the cryptocurrency, with the price of bitcoin jumping 20% and 16% respectively in two days.

Then this month, as Tesla questioned Bitcoin’s energy consumption and announced that it was “suspending the use of Bitcoin for vehicle purchases,” the price fell about 50%, wiping out all gains since the end of January.

It's hard to be a godfather! Is Musk going to take the blame for the Bitcoin crash?

Bitcoin prices continued to fluctuate sharply over the weekend, falling to $31,227 at one point, down 51% from a high of more than $64,000 in April. The cryptocurrency price rebounded slightly on the 24th, Beijing time, and now sits above $35,000.

The “godfather of cryptocurrency” led a mutiny, and Musk is going to “take the blame” for the bitcoin crash?

Behind the “tweets for stocks”

After the bitcoin crash, a group of Musk’s previous fans quickly turned the tables and vented their anger at the former “godfather of cryptocurrency”.

For example, this fan raged, “You’re the most annoying person in the world. All my friends, including myself, were die-hard Elon/Tesla/SpaceX/Neuralink fans, and now we hate you from the bottom of our souls.”

It's hard to be a godfather! Is Musk going to take the blame for the Bitcoin crash?

But the so-called “Twitter rule” is really a matter of mutual consent.

Peter Atwater, a lecturer in economics at William & Mary College, says there is some truth to Musk’s ability to attract followers.

I think Musk himself has really shown a rebellious side, especially on Twitter. Looking at cryptocurrencies and electric cars, I think they have at least two characteristics that appeal to young people – one is futuristic …… the other is rebellious.

Forbes columnist Leeor Shimron, for one, compared the price correlation between Tesla, Bitcoin and the S&P 500 over the past six months and found that Tesla and Bitcoin have shown a strong correlation of 0.615 over the past six months, far exceeding the correlation between the two assets and the S&P 500.

It's hard to be a godfather! Is Musk going to take the blame for the Bitcoin crash?

Among investors who hold Tesla and Bitcoin, retail investors again make up a very large portion. Bitcoin was originally started by retail investors, and Tesla is also held by retail investors as a weighted stock for many funds.

The Wall Street Journal quoted Bitcoin investor Heidi Chakos as saying

I feel sorry for people who make investment decisions based solely on the tweets of someone who is just trying to use the influence of his platform to make a profit for themselves.

At the same time, as the head of Tesla, Musk knows that there is a huge overlap between those who buy Tesla stock and those who buy Bitcoin, so how can he not “support” his own fans?

Of course, Musk could use his influence to push the price of bitcoin even higher.

But as Wall Street News pointed out in its weekend article, the decentralization of Bitcoin has been almost dominated by Musk’s personal influence since he stepped in, not to mention the fact that Bitcoin’s price is set by a centralized exchange that is full of leveraged transactions, making Bitcoin’s decentralization a misnomer. And that, in turn, is one of the biggest ironies of Bitcoin.

“He doesn’t care about your finances.”

Musk isn’t the only one long on social media to influence markets, as many prominent pundits and public figures have flocked to Twitter, Reddit, Clubhouse, and other platforms over the past year to speak out on cryptocurrencies, small-cap stocks, and more.

Cathie Wood, last year’s “Queen of the Bulls,” is one of them. As a crazy advocate of innovative stocks, Wood not only posts free research reports on Reddit and other social media platforms, but also publishes daily position changes and even discusses investment targets with users in person, which has built up a large and loyal fan base and made her every move highly influential.

At the same time, the history of individual investors using their market influence to speculate on the underlying is not new – such as Gerald Tsai, the star public fund manager of the 1960s, Peter Lynch, the manager of Fidelity Magellan, and, naturally, Warren Buffett. They have amassed a large following as their positions have outperformed most of their peers year after year.

What “fans” must understand, however, is that Musk is nothing like them.

He is an entrepreneur, not a fund manager. As the Wall Street Journal quoted Bitcoin investor Lark Davis as noting, “it’s not like someone like Musk doesn’t care about the finances of these fans,” and there’s an inherent power gap between him and those who might see his tweets as some sort of investment gospel.

But Davis said, “Sadly, someone as influential as Mr. Musk has become an overly powerful opinion leader in the industry.” He urged investors to do their own research on cryptocurrencies and avoid the clouds.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/its-hard-to-be-a-godfather-is-musk-going-to-take-the-blame-for-the-bitcoin-crash/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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