The Love-Hate Relationship Between Elon Musk and Bitcoin

Recently Elon Musk has been tweeting about Bitcoin and Dogecoin. According to his tweets, the crypto market has been swaying. Some investors are worried, and some are happy as the market moves by one of the biggest cryptocurrency influencers. What are his intentions? What is the impact of his tweets? Let’s take a look.

A person holding phone with the Twitter app open
Photo by freestocks on Unsplash

Who Is Elon Musk? 

Elon Musk is an entrepreneur and the CEO of Tesla. Musk is the founder, CEO, and chief engineer at SpaceX, founder of The Boring Company, and co-founder of Neuralink and OpenAI. 

His business career started with Zip2 in 1995. The company developed and marketed a digital city guide for newspaper companies. Zip2 was bought out by Compaq and the Tesla CEO received $22 million for his share.

Elon Musk and Tesla

Tesla was incorporated in 2003 by Martin Eberhard and Marc Tarpenning. Musk led the Series A round of funding and joined Tesla’s board of directors in 2004. In 2008, he became the CEO of Tesla. Since the initial offering in 2010, Tesla’s stock has risen significantly and entered S&P 500 that year.

A Tesla charging station
Photo by Pixabay from Pexels

Elon Musk & Bitcoin

The Tesla CEO has been tweeting about Bitcoin and Dogecoin this year, and the price has been dancing up and down according to his non-stop tweets. How do his tweets influence the crypto market?

In January 2021, he changed his Twitter bio to “#bitcoin” and posted: “In retrospect, it was inevitable.” Accordingly, the price of Bitcoin that was at $30,000 leaped 20% right after Musk’s tweet (Coindesk). 

In February 2021, the Tesla CEO tweeted that it has bought $USD 1.5 billion of Bitcoin and would start accepting Bitcoin as a form of digital payment. After his tweet in February, the Bitcoin price skyrocketed over 300% since October of 2020 (Statista). Musk said he supported Bitcoin because “it is really on the verge of getting broad acceptance by conventional finance people” in February 2021 (CNBC). 

On May 12th, 2021, the Tesla CEO tweeted that Tesla stopped accepting Bitcoin as a payment as Bitcoin “[comes] at great cost to the environment.” He said that “Tesla will not be selling Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy.” It seemed that he opted to be green and turned sour on Bitcoin. As a response to this tweet, Bitcoin price dropped 16% right after (Coindesk).  

He sent the price of Bitcoin further down with his implications that Tesla may sell Bitcoin on May 16th, 2021. The price fell drastically that in a week after his tweet, the price fell 20% compared to right before his tweet. 

On May 19th, 2021, Musk tweeted “Tesla has diamond hands.” “Diamond hands” describes when an investor holds onto stocks for the future gains regardless of their future losses  (Cyberdefinitions). This implication that Tesla will not sell Bitcoin gave a mixed message from what he tweeted earlier on May 12th. Regardless of his diamond hands tweet, the Bitcoin price fell. Plus, China’s clamp down on cryptocurrency did not help with the price falling. 

A diamond
Photo by Evie S. on Unsplash

On June 3rd, 2021, Elon Musk tweeted Linkin Park’s song “in the end it doesn’t even matter” with a picture of a couple breaking up along with #bitcoin and a broken heart emoji. Right after the tweet, he tweeted a couple in a three cut cartoon. The woman in the cartoon says “I miss you. Why are you crying?” Then the man replies “Cuz I miss you too” with the graph of price falling for Bitcoin in the background of the cartoon. After the tweets, the price of Bitcoin dropped 12% to about $38,000 after the tweet (Coindesk). It is about 40% down from the record high of $65,000 in April.

Bitcoin Mining

Bitcoin mining is how Bitcoin maintains its crypto network. The miners secure the cryptocurrency network and process Bitcoin transactions. Bitcoin miners are awarded while solving complex crypto puzzles under proof-of-work system. However, Bitcoin miners use more electricity annually than the whole energy usage of Argentina, analysis by Cambridge University suggests (BBC news).

The words "Bitcoin Mining" spelled out
Photo by Olya Kobruseva from Pexels

Bitcoin Miners

On May 24th, the Tesla CEO tweeted “spoke with North American Bitcoin miners. They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising.” After the tweet, the price of Bitcoin rose by 20% from $USD 31,248 to $USD 38,895 on the market.

Dogecoin

Bitcoin is not the only crypto that he tweets about. He also tweets about other cryptocurrencies, such as Dogecoin.

What is Dogecoin?

Dogecoin is a crypto that started as a digital joke, making fun of speculations on Bitcoin at the time. Using Shiba Inu as a symbol, Dogecoin promotes “fun and friendly internet cryptocurrency.”

Elon Musk and His Tweets on Dogecoin

On May 13th, 2021, Elon Musk tweets “Working with Doge devs to improve system transaction efficiency. Potentially promising.” Just based on this tweet, the price on the market went up 20% in a day (Coinbase).  

On May 20th, 2021, he tweeted “how much is the Doge on the window?” with Shiba Inu on a $1 bill. This implied that Dogecoin’s price could go up higher. The prices of Dogecoin shot up by 20% from 0.32 cents to 0.40 cents in a day after his tweet. 

Dogecoin priced increased 12,000% compared to this time (May 25th, 2021) last year mostly due to Elon Musk’s strong support. Then why is he a huge supporter of Dogecoin?

Dogecoin
Photo by Rūdolfs Klintsons from Pexels

Why Dogecoin?

Elon Musk supports Dogecoin because it has “dogs and memes.” On Saturday Night Live, Musk posed as financial expert Lloyd Ostertag (also known as Doge Father) to provide insights on crypto. As an answer to the comedian interviewer who was continuously asking him what Dogecoin was, he said, “It started as a joke based on an internet meme. Now it’s taken off in a very real way.” When the interviewer was confused and asked Musk again what Dogecoin really is, Musk replied, “Like I said, it’s a digital currency…about as real as a dollar…” 

After another interviewer satirically asked Musk again what Dogecoin was. Musk said, “It is the future of currency. It is an unstoppable financial vehicle that’s going to take over the world.” Then toward the end of the show Musk admitted that “it is a hustle.”

Musk and His Intentions

What is Musk gaining from his tweets on the crypto? When an investing influencer claimed that Musk “has a large doge holding,” Musk tweeted “I haven’t and won’t sell any [dogecoin].”

A pile of Dogecoin
Photo by Executium on Unsplash

Social Media Presence

Dogecoin won Elon Musk over a million Twitter followers in just four days after Musk tweeted “Dogecoin is the people’s crypto” followed by “no highs, no lows, only Doge” on February 4th, 2021 (The Business of Business). The price of Dogecoin shot up to $USD 0.0849 in value which is a 37% increase within 24 hours of his tweets. The latter tweet alone had 124.7K retweets and 772.1K likes as of May 30th 2021. He has 56 M followers, 14,397 total tweets, and 401,332 total retweets. 

The huge number of retweets imply that his tweets are like the butterfly effect. If Musk talks about it, everyone will talk about it too. According to a Twitter calculator, Musk’s estimated earning value per post is $USD 421,652 to $702,754 (Influencer marketing hub). His tweets on Dogecoin have far more comments, retweets, and likes than his SpaceX post about the Falcon 9 launch that was tweeted on the same day. The SpaceX tweet had 1.5K comments, 9.1K retweets, and 90.2K likes. Recently he announced that SpaceX will be accepting Dogecoin as payment for a space travel. It is undeniable that Musk is receiving a large traffic of visitors to his Twitter accounts when he tweets about Doge. This may influence the media exposure of his other businesses.

SpaceX building and a rocket ship
Photo by SpaceX on Unsplash

Other Influencers

Rappers

American rapper Lil Yachty said he is investing a third of his asset in Dogecoin (Cryptotonomist). He has been a supporter of Dogecoin since February 2021.  

Another American rapper, Snoop Dogg, has been investing in Dogecoin since February 2021. He tweeted “U definitely gonna be able to get my NFTs with Dogge !! Uhearme! Coming soon” in March. He also posted a photo of his head replaced with a Shiba Inu that symbolizes Dogecoin.

Youtubers

A Youtuber named KEEMStar, creator of entertainment show #DramaAlert, who has 2.4 million Twitter followers has supported Dogecoin since July 2020. Mark Cuban, billionaire entrepreneur and NBA team owner, said “Although Dogecoin is not the best investment, it is preferable to invest in the asset than to play the lottery; it is also a way in which you can learn to use cryptocurrencies.” 

Rapper, entrepreneur, and streamer Soulja Boy gave DOGE his endorsement via a Dogecoin-is-the-future video. He has 5.2 million followers on Twitter.“Yo Dogecoin Army, it’s going down man. Make sure y’all tap in for Dogecoin, man, it’s gonna be the crypto of the future. Dogecoin is the people’s coin. Let’s go. It’s your boy, Soulja Boy,” He was paid to post by one of his subscribers via Cameo.

TikTok

As of January 2021, TikTok has 689 million monthly active users worldwide (Oberlo). In July 2020, there was #dogecoinchallenge and Dogecoin price went to the moon amid the cryptocurrency challenge. 

The TikTok user James Galante said in his video that “Dogecoin is worthless. There are 800 million TikTok users. Once it hits $1, you will have $10,000. Tell everyone you know. Let’s all get rich.” This caused Dogecoin trade volume to skyrocket by 1,000% during this time (CoinMarketCap).

Consequence

It is not clear where Dogecoin is headed. The joke coin that started as a joke is not a joke anymore. It is ranked at #7 with the cryptocurrency market data of $USD 40.6 million in prices (CoinMarketCap). Thomas Perfumo, head of business operations and strategy at Kraken Digital Asset Exchange said, “The overarching narrative behind the coin’s 30x run this year is a protest against systemic inequities in the traditional financial industry – Dogecoin is, after all, the original ‘meme asset.’ This is an extension of the value that cryptocurrencies derive from vibrant and growing communities that give rise to network effects.”

Conclusion

Elon Musk said “I’ve got to watch what I say here because some of these things can really move the market…Occasionally I make jokes about dogecoin but they are really just meant to be jokes (CNBC).” Musk has a history of getting into trouble for his tweeting. In 2018, he was sued by US Securities and Exchange Commission (SEC) for untruthfully tweeting he had secured funding for a private takeover of Tesla. From this incidence, he stepped down temporarily from his chairman role and accepted limitations on his Twitter usage.

Defi (Decentralized finance) started out as a means of finance that does not rely on central financial intermediaries. Everyone can access Defi services and products. However, if the crypto market sways drastically according to just one mega influencer’s tweet, it is not clear if Defi is serving its purpose. According to his tweets, his favor on certain crypto could turn sour quickly as his belief in Bitcoin turned into a breakup. “He’s trolling the community,” said Bobby Ong, co-founder of crypto data aggregator and analytics website CoinGecko. It will be interesting to see how his future tweets may play out in the future crypto market.


About Author: Jiwon Angela Son is a writer at VirgoCX. She is a marketing professional who has sales, marketing, and advertising experience in innovation-driven industries for 12 years. Prior to working at VirgoCX, she was a marketer at global pharmaceutical companies such as Bristol Myers Squibb and Actelion Pharmaceuticals. Twitter


Disclaimer: No Investment Advice The contents of this article are for informational purposes only and are not intended as, and shall not be understood or construed as, investment advice, financial advice or trading advice. There are substantial risks associated with the trading of cryptocurrencies and you should consult with a licensed financial advisor prior to making any trading or investment decisions. Content Not Warranted The contents of this article are provided “as is” and without warranties of any kind. You bear all risks associated with the use of the content provided including without limitation, any reliance on the accuracy, completeness or usefulness of any content available within this article.

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