For some reason a lot of crypto investors are focusing on Elon Musk. It was good news for cryptos when Tesla announced it was buying bitcoin as a treasury asset. But what is the hype now?
Most of Musk’s tweets are meaningless. E.g. He posted recently that Tesla might be willing to accept bitcoin for payment once bitcoin miners use 50% green energy. Bitcoin jumped nearly 10% thereafter. But if Tesla does accept bitcoin as payment, it could result in maybe an immaterial 0.01% in transaction volume. Many of these moves are caused by sentiment traders who use algorithms that track and analyse social media. In many cases, sentiment traders feed the results of the social media analysis to their trading bots. When someone Musk with his 55 million followers on Twitter posts something positive about bitcoin, it spurs both algorithmic and traditional traders. Everyone jumps in, often with leverage.
Musk’s bullish message about dogecoin, one of the most bizarre projects in crypto, literally a joke, is the top of this all. He posted that the coin will go to the moon and this worthless coin went from $0.08 to $0.28 after Musk’s tweet. There is no doubt that Musk intentionally pumped this useless coin. This should be the final nail in the coffin of his crypto credibility.
Sven Franssen