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Elon Musk And Cryptocurrency: Friend Or Foe?

bitcoin depot

Back in February of 2021, Elon Musk’s company, Tesla, Inc., purchased 1.5 billion USD worth of Bitcoin. This massive investment stoked various conversations about Bitcoin, the environment, the man, and the company. It also, quite obviously, affected the cryptocurrency market and will go down as one of the major crypto catalysts of 2021.

However, Bitcoin is not the only cryptocurrency that Elon Musk has mentioned in recent times. The CEO of Tesla and SpaceX has been among the major forces driving the sentiments of investors around the cryptocurrency market, which has caused a wave of other companies to start accepting Bitcoin. But is Elon Musk truly a supporter of cryptocurrencies? Let's find out. 

Elon And The Bull Market

Although Bitcoin has undoubtedly been on an impressive run of form this year, Elon can certainly take a little credit for pushing the coin’s value even closer to the highly coveted $100,000 price point.

In the early days of February 2021, Elon Musk added the hashtag, #bitcoin to his Twitter bio, a small move that made significant changes in the prices of cryptocurrency, pushing the prices up as much as 20%. Elon Musk also stated on the Clubhouse audio chat app that he is a supporter of Bitcoin. This news comes at the heels of his constant flirtation with cryptocurrency. Elon Musk acknowledged that he has to watch his words as whatever he says can move the market, and rightfully so.

He had been constantly prodded into the cryptocurrency market by his friends and he once succumbed, biting a slice of the Bitcoin cake when his friend gave him some coins in 2013. He also mentioned that he should have bought some Bitcoin eight years ago but it's better late than never. He did state categorically, “I think Bitcoin is on the verge of getting broad acceptance by conventional finance people.”

Elon Musk had stated that he doesn’t have strong opinions about other virtual coins but he has tweeted about Dogecoin (DOGE), the meme-based cryptocurrency, in the past and in 2019 indicated that it was his ‘fav cryptocurrency’. When a tweet from Musk was interpreted by Reddit users to mean Musk was throwing his support behind Dogecoin, the value of the coin skyrocketed as much as 800% within 24 hours. Musk came out to say that he occasionally makes jokes about Dogecoin which was made as a joke to make fun of cryptocurrencies.

“But fate loves irony. The most entertaining outcome and the most ironic outcome would be that Dogecoin becomes the currency of Earth in the future.” He had added jokingly.

Elon Musk’s Views On Cryptocurrency

Over the years, Musk has made several comments about cryptocurrency, which are reflective of his views about the concept. Here is a timeline of some of these views throughout the years:

2017

  • In November 2017, a former intern at SpaceX claims that Musk is Satoshi Nakamoto. Musk debunks that rumor in response.

2018

  • On February 22, when asked about spamming by one of his Twitter followers, Musk replied, “I literally own zero cryptocurrency, apart from the 0.25 BTC that a friend sent me many years ago.”

2019

2020

  • On December 20, Musk tweeted, “Bitcoin is my safe word” and then later added, “Just kidding, who needs a safe word anyway!?”
  • On January 10, Musk tweeted that Bitcoin is not his safe word.

2021

  • On January 29, Musk added ‘#bitcoin’ to his Twitter bio which resulted in a 14% surge in the price of the largest cryptocurrency. The total market value of all cryptocurrencies passed over a trillion dollars for the first time.
  • On February 1, on the social media app, Clubhouse, Musk announced himself as a supporter of Bitcoin, stating that Bitcoin is on the verge of general acceptance by conventional finance people. He also stated that he was slow on the uptake and should have joined the crypto train years ago.
  • On February 4, Musk tweeted, ‘Dogecoin is the people’s crypto’, ‘I am become meme, Destroyer of shorts’ and ‘Doge’ about Dogecoin. All of this increased the value of Dogecoin to over 60%. Dogecoin has become the eighth biggest cryptocurrency with a market value of about 10 billion dollars.

Tesla’s Affect on the Market

According to a new note from the market research Wedbush Securities back in February, the Tesla stocks are now tied heavily to Bitcoin. Wedbush Securities had noted that Tesla had observed over a billion dollars in profit from the 1.5 billion dollar Bitcoin investment it made a month earlier. This figure is way more impressive than the 721 million dollars profit that it made selling cars for the entire year, 2020. Despite this impressive figure, Wedbush Securities still refer to Bitcoin as a ‘sideshow’.

Even after Musk invested over a billion dollars into Bitcoin, he announced that Tesla might soon accept cryptocurrency as a form of payment for orders. This move further increased the value of Bitcoin in the market, setting a record high of over a 10% increase. As of April 2021, Tesla has officially started accepting Bitcoin payments for their vehicles.

Friend or Foe? You Decide.

Wedbush considers cryptocurrency to be both friend and foe to Musk when the Tesla stocks plummeted for two days in a row due to Bitcoin’s $10,000 crash in one day. While the 1.5 billion dollar loss is small buckets to the company, Wedbush argues that many investors are now beginning to associate Bitcoin with Tesla. The bullish stance that Musk has taken with Bitcoin has played a part in this stance that many investors are taking. It does not truly matter what the truth is. After all, like Wedbush rightly argues, “On Wall Street, perception is reality”, and we all know just how fickle perception can be.

May 5, 2021