How Elon Musk’s Tweets Pulled and Pushed Crypto Market Prices
Musk’s pronouncements on cryptocurrency have added to pressure on them, although he did tweet a diamond emoji amidst the mayhem yesterday to indicate that bitcoins were a safe investment.
May 20, 2021 / 07:58 PM IST
Every cryptocurrency has a particular set of parameters that one should research before investing. One can broadly divide them into three categories: project metrics, financial metrics, and on-chain metrics.
A month is a long time in the world of cryptocurrency. After recording a high of $64,800, Bitcoin, the world’s most popular and volatile cryptocurrency, dived over 50 percent from its high in April to as low as $30,681 on May 19, bouncing back to $37,002 at the days end.
It was not the only one. The cryptocurrency sector experienced mayhem losing over $177 billion in market capitalization on May 19 after Bitcoin and Ethereum reported the largest single day price drop since March 2020 as China banned its financial and payment institutions from providing cryptocurrency services.
As Reuters reported, the fall could have been even larger but for the support of two of the biggest backers of crypto currencies - Tesla Inc. chief Elon Musk and Ark Invest's chief executive officer Cathie Wood. The former tweeted a diamond emoji indicating that bitcoins are safe investments.
Musk’s history with crypto
Musk’s series of pronouncements on cryptocurrency, usually through twitter, have been influencing or triggering price fluctuations.
On March 24, for instance, the Tesla chief tweeted saying that one could purchase a Tesla with Bitcoin. This cheered up the crypto market giving it the assurance that an institutional giant like Tesla is backing the game.
Later, on May 13, Musk has reversed his earlier decision of Tesla selling vehicles in exchange for Bitcoins. This has now sent tremors in the crypto world leading to fall in Bitcoin prices.
The chart below shows the movement in Bitcoin prices alongside Musk’s tweets.