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A series of events that reveals the impact on Bitcoin’s price by Elon Musk.
Institutional investments have been one of the key themes in the cryptocurrency industry for the second half of 2020, and it continues to gain momentum in 2021. The trend of institutional investment started with Square purchasing $50 million worth of Bitcoin in 2020. The move resembles several institutions like Grayscale, MicroStrategy, MassMutual, and more that now hold Bitcoin in their investment portfolios. Moreover, leading banking institutions like JPMorgan and Morgan Stanley are also weighing Bitcoin as an investment instrument.
One of the organizations that topped the list of institutional investments in Bitcoin has been Tesla. Led by Elon Musk, Tesla, in January 2021, announced that it purchased $1.5 billion worth of Bitcoins. A document filed by Tesla reveals that the move is designed to provide more flexibility to diversify their investments. Elon Musk has always held an opinion towards cryptocurrencies that he has expressed on numerous occasions through different platforms, including his Twitter handle and even interviews.
In this article, we look at the different incidents whereby Musk expresses his stance on Bitcoin or crypto and its impact on the price of Bitcoin.
The Tesla CEO has started being vocal about Bitcoin and cryptocurrencies like Dogecoin in the last two years. In May 2020, Elon Musk revealed in a Tweet that he owns 0.25 BTC while replying to JK Rowling. In the same thread, he also stated how the issuance of money by the central government is making the ‘Bitcoin internet money look solid.’
On more than one occasion, Musk has advocated another cryptocurrency called Dogecoin. In December 2020, Musk, on his Twitter handle, tweeted ‘One Word: Doge.’ This caused the cryptocurrency to jump by over 20%. The Shiba-Inu-themed digital coin, intended to be created as a meme, rallied over 50% after Musk posted two consecutive tweets on Dogecoin in the first week of February 2021. He also recently conducted a Twitter poll asking his 48.6 million followers to choose ‘the future currency of Earth’ with one of the options being ‘Dogecoin to the moon.’
Although Tesla announced its Bitcoin investment in January 2021, Musk has held an opinion on Bitcoin for a while now. This has been evident on several occasions - from Musk explaining Bitcoin as the ‘internet of money’ to his recent interview where he expressed his desire to own Bitcoins.
Let’s look at the series of events of Musk and his influence on the price of Bitcoin.
The Tesla CEO’s tweets or statements on Bitcoin have not always resulted in a positive impact on the BTC price. For instance, in December 2020, his tweet on Bitcoin being as bs as fiat money resulted in a 1.7% decline in Bitcoin’s price. Subsequently, on the same day, he also tweeted, ‘Bitcoin is my safe word,’ which briefly increased the volume of trades per hour.
On January 29, 2021, Elon Musk changed his Twitter bio handle to ‘#Bitcoin.’ This event caused BTC price to skyrocket from nearly $32,000 to $38,000 in a span of a few hours. Moreover, the tweet also pushed a rise in the number of trades from 5,000 trades per hour to more than 20,000 trades per hour.
After changing his Twitter bio handle, he openly showed his support in Bitcoin in an interview on Clubhouse. In the interview, he discussed that in the past, one of his friends offered him to get involved in Bitcoin eight years ago, admitting that “I at least should have bought some bitcoin eight years ago.” He openly confirmed that while he may not have an opinion on other cryptocurrencies, he supports Bitcoin. Furthermore, he also stated that Bitcoin is on the verge of getting broad acceptance by conventional finance people.
A major milestone that brought waves in the entire cryptocurrency industry was when Tesla announced its $1.5 billion worth of investment in Bitcoin in February 2021. The reaction to this news caused Bitcoin’s price to surge, pushing it beyond $48,000. Twitter activity on Bitcoin also reached an all-time high with 143,000 tweets in 24 hours. During the same period, Tesla also announced that it plans to make Bitcoin an official payment method for its products in the near future.
After trading at all-time high levels, a tweet by Musk also caused a significant drop in the prominent crypto asset. In a tweet, Musk stated that he thought the price of bitcoin and Ethereum “do seem high lol’. This tweet sent Bitcoin’s price to drop as much as 10%. Eventually, the price of BTC also fell below $46,000 before rising to levels close to $50,000.
There is a lot of influence on any asset when one of the most influential people on the earth holds a strong opinion towards it. More than the impact on Bitcoin’s price, Musk’s crypto ventures have led to an increase in mainstream adoption of the industry. The retail activity has boosted with a rising number of traders growing familiar with crypto as a new asset class.
Furthermore, the acceptance of Bitcoin as a payment method by Tesla also boosts its credibility as a payment method. More importantly, its $1.5 billion Bitcoin investment has led to many institutions drawing their eyes on digital assets.