With cryptocurrencies crashing to nearly half their values in weeks--losing trillions in dollars in a bloodbath due primarily to China's pronouncements that it would ban trading of digital tokens--traders are annoyed over another factor behind its dizzying volatility.
Elon Musk's tweets.
He might have sought to protect the environment when he canceled Bitcoin as a Tesla payment option due to the digital coin's use of fossil fuels in its mining activities that pushed the crypto asset down five percent off its value. And on Monday, a Musk tweet saying he is in talks with Bitcoin miners over the digital coin's sustainability sent the world's largest cryptocurrency into a surge, CNBC reported.
And Dogecoin, yes, who could not ignore that moment on national television when he tried to be hilarious and poked fun at his favorite shiba-inu faced coin, saying it was a "hustle" that initially sent it to steeply slide? And days later, acknowledging the promise of Dogecoin in declaring that he was working with doge developers for "system transaction efficiency"--leading to the meme-based coin to surge 30 percent.
Ethereum Price, Dogecoin Value at Risk Over Elon Musk Tweets
Either way, cryptocurrency bulls are irked by the way Musk's remarks exert so much influence on the digital assets' prices, CNN said in a report. These crypto investors are particularly annoyed by the way a comment from Mask send prices to a tailspin, as News18.com reported. This led to putting cryptocurrencies, including Ethereum and Dogecoin, at risk.
Following Musk blindly has made many people "lose a lot of money," according to Alex Mashinsky, CEO and Founder of crypto lending platform Celsius in an interview quoted in the CNN report. He added that the crypto community needs to be "more responsible in how it explains these assets and risk."
As such, these investors wish he'd tweet more responsibly about the market, or just focus his attention on building cars or launching more people into space instead.
Such upturns and downturns in crypto prices as a result of Musk's mere one-worded tweet could be an indication that the Tesla and SpaceX CEO's chatter are confusing investors.
Dogecoin Value Questioned, Bitcoin, Ethereum Still 'Best Bet'
A glaring example, analysts quoted in the report as saying, is that no convincing argument exists proving that Dogecoin is of any value, except for the fact that Musk is promoting it.
Long-term investors are most likely not to heed Musk's pronouncements and still bet on Bitcoin, Ethereum, and other prominent coins. Bitcoin is considered as an inflation hedge or digital gold, and Ethereum remains a worthy investment due to its many use cases, such as non-fungible tokens (NFTs) on its blockchain.
But analysts interviewed by CNN urged small investors to "stay away from meme coins," emphasizing that they should not follow Musk's tweets blindly.
'Elon Musk Tweets Still Matter...For Now'
"The bubble will burst," angel investor Eloisa Marchesoni also told CNN. And this, she says, happens with new assets, such as "joke currencies."
"It will pop and we're not yet at the climax," she declared.
Mashinsky noted that these small investors will eventually grow weary with all the volatility, and this would leave only the long term investors to put their stake on these digital assets.
But the crux of the matter is that cryptocurrencies, being relatively new, are essentially volatile compared to traditional instruments such as currencies, stocks and bonds. Analysts say this will likely to remain the same, especially if Musk doesn't stop tweeting.
"What he says still matters...at least for now," Ed Egilinsky, Direxion Managing Director and Head of Investments, further told CNN.
