Bitcoin has been on a roller-coaster ride over the past 24 hours after a one-word tweet Sunday night by Elon Musk caused the cryptocurrency to dump 15 percent of its value. However, the digital asset has now bounced and regained much of its loss after the Tesla billionaire sent a second tweet that appeared to contradict the first.
The dizzying gyrations began when an insider crypto-focused account called @CryptoWhale, which has just 158,000 followers, tweeted Sunday evening: “Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him…”
Musk replied: “Indeed...”
Musk’s pithy response triggered an immediate global selloff of the currency.
On Sunday morning, the value of one bitcoin was $49,594. After Musk sent his tweet, the token declined at a vertiginous pace, dropping as low as $42,141, a more than 15 percent decline.
Then, at around 2:30 a.m. ET, Musk tweeted again, writing: “To clarify speculation, Tesla has not sold any Bitcoin.”
The tweet sent the price of bitcoin shooting back up: by 7:30 a.m. ET Monday, one bitcoin was fetching $45,251, according to CoinDesk.
Investors in bitcoin are well used to seeing their fortunes march to the tune of Elon Musk’s social-media feed.
On Wednesday last week, a tweet stating that Tesla would no longer accept bitcoin as payment, reversing a policy decision itself only taken in March, caused the crypto to plunge 10 percent.
Musk said the company would no longer be accepting the tokens due to environmental concerns about the energy used by computers to “mine” new coins by performing complicated mathematical tasks on increasingly vast banks of servers.
Much of 2021’s rise in the value of bitcoin has been attributed to Tesla’s February disclosure that it had bought $1.5 billion of bitcoin.
Various high-profile interventions by Musk have also had a massive effect on the value of dogecoin, a cryptocurrency originally started as a joke in 2013 by two software developers intending to satirize the wild speculation on cryptocurrencies at the time (which looks tame by 2021 standards). Dogecoin now has a market capitalization of around $53 billion. This year alone, its value has spiraled up by as much 10,000 percent, rocketing from $0.007 to a high of 71 cents on May 8. Its value plummeted by 43 percent in minutes that evening, after Musk dismissed it on Saturday Night Live as a “hustle.”
With the whims of Musk fast emerging as the primary driver of bitcoin value, as exemplified by this weekend’s ride, many big investment funds have decided they have had enough.
“Our stance with clients is the 10-foot pole rule: Stay away from it,” Jason Pride, chief investment officer of private wealth at Glenmede, told the Financial Times. “I don’t think the Fed and other regulators are fans of the current market structure for cryptocurrencies.”
And Naeem Aslam, an analyst at Think Markets, told the Guardian: “It is important to keep in mind that it is true that the current selloff in bitcoin price is mainly due to Elon Musk. But the reality is that bitcoin lost its upward momentum a long time ago, and this is because all that positive news about bitcoin failed to push bitcoin prices higher. It was clear that bitcoin prices went too far, and a correction was due. This correction is taking place now, and it is likely that we may see the bitcoin price decline further. The near-term support for bitcoin is near the 38K price level.”