Crypto’s strained relationship with Elon Musk: ambassador or responsibility?

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When Tesla CEO Elon Musk revealed his company’s exposure to Bitcoin (BTC) and announced the launch of crypto payments, BTC took off to an all-time high. Soon after, however, Musk began tweeting about concerns about BTC’s environmental impact, and Tesla reversed its crypto payments policy, resulting in the loss of half of Bitcoin’s value and the entire surrender. of the crypto market. In short, Musk is tweeting lukewarm support for crypto, and prices are going up; Musk posts a meme hinting at his “breakup” with Bitcoin, and prices drop.

For a sector that values ​​disintermediation and the broad distribution of economic power above all else, the cryptocurrency space has given one man far too much influence over his fortune. The hope is that, as soon as possible, the crypto market will overcome its addiction to musk. At this point, however, the tech mogul’s Twitter talk is one of the most influential exogenous factors driving the prices of digital assets.

Ultimately, who is Mr. Musk for the crypto industry – an eccentric friend, adversary, or just a billionaire having unfettered fun playing with a trillion dollar market?

While it’s impossible to know what the controversial billionaire has in mind, there is room for assessments of what his presence may mean for the industry in the long run – as well as educated guesses about his positions and his motivations.

Crypto influencer # 1

To date, Musk’s influence on the value of crypto assets shows no signs of abating. Most recently, Musk tweeted a response to a UKTN article where he, by the way, articulated terms that may cause Tesla to resume the practice of accepting Bitcoin transactions. And guess what happened next? That’s right: Bitcoin had recovered a few thousand dollars overnight.

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This is exactly what concerns BTC and can therefore be considered “serious”. A separate chapter in the Musk-crypto saga is his – presumably ironic – involvement with various altcoins that can multiply their market caps within hours in response to his tweets. From the systematic backing of the chief dogecoin (DOGE) memecoin to finding more obscure but poignant items, such as the porn industry-affiliated CumRocket (CUMMIES) coin, Musk has participated in many price movements.

The detrimental effects of Musk’s antics on the crypto industry are well documented. First and foremost, there are retail investors who took inspiration from Tesla’s CEO to make deals that cost them more than they could. to afford to lose. There are surely many more who have suffered losses even without directly considering Musk, victims of the market meltdowns his escapades triggered.

Industry-wide, recent storms of volatility prevent further forging the reputation of digital assets as a mature and secure asset class. As a newcomer looking for another place to park your money, how likely are you to be excited about an investment that can drop 40% in a day as a result of a random tweet? A related concern is that such malleability to potentially malicious market manipulation can attract unwanted regulatory attention to the cryptocurrency space.

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Some still believe there is an edge to the volatility that Musk perpetuates, as Mati Greenspan, founder and CEO of financial advisory firm Quantum Economics, told UKTN: “Musk’s involvement in space crypto is a net positive. Volatility has long been hailed as a driver of volumes and with adoption.

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However, others agree with the view that whatever mild results from Musk’s crypto advertising, the negatives largely prevail. Dean Steinbeck, co-founder and COO of blockchain solutions provider Horizen Labs, told UKTN:

“Musk’s behavior has done a lot of damage to the crypto. First, he perpetuated the red herring argument that Bitcoin is bad for the environment. This argument is bogus and perpetuated by projects with an ulterior motive. Second, the attention Musk brings comes from his amateur tweets that support pieces of bullshit meme that have no substantial value.

Steinbeck added that Musk is “nothing more than a sociopathic billionaire who knows next to nothing about crypto but thinks he’s an expert.”

Why?

Many in the crypto space are wondering what Musk’s motivation is for throwing tweets that are often contradictory but reliably move the market. Could it be as low and rude as manipulating coin prices for profit? Or, maybe, are the tweets a byproduct of a good faith learning process with all its twists and turns? Or is it just for fun?

The funny hypothesis seems to be particularly influential, and some participants in the crypto market are not enjoying it.

Other crypto influencers, however, are poised to give Tesla CEO the benefit of the doubt. Brock Pierce, cryptocurrency investor and chairman of the Bitcoin Foundation, doesn’t think Musk’s actions affecting digital assets are malicious, telling UKTN:

“It seems like [Musk] has been very responsive to different opinions and learnings as he descended into the crypto ‘rabbit hole’, but I don’t think it was opportunistic on his part. I think he’s trying, like he does in many industries, to deepen their understanding more and more. Education is not a linear path, and it follows its own process and does so in a very public way due to its large audience. “

Pierce added that because the cryptocurrency community tends to be forgiving, there is always a chance that Musk will be a very important space advocate, provided his intentions prove to be true in the medium to long term.

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Opinions differ widely on this latter perspective. When asked if Musk had definitely ruined his reputation with the crypto community, Greenspan replied:

“It’s categorical, yes. People in space are extremely sick and tired of its wayward intervention in markets.”

Greenspan summed up the popular sentiment by saying that while many are happy to follow along for a laugh, most are in fact jaded.

If the latter is the case for a critical mass of crypto market participants, that could be good news. It will take considerable “musk fatigue” to break the “musk spell” and free the entire asset class from the whimsical influence of one powerful person.