Bitcoin’s 2021 journey so far has been quite different from its previous years in terms of the volume it has gained. And because of this volume, or as some may call it inflating of the balloon, it is getting more attention now than ever before. Behind the curtains, there are some major players who are trying to control the behaviour of this ecosystem. In this article we will look at some of the important events that impacted crypto recently in the light of the two sides of Bitcoin: Intention and the hype.
So what is the Tesla CEO up to?
It is no longer a secret that Elon Musk has been apparently playing with markets, Crypto, and StockXs alike, since the end of last year. The remote control, this time again, is his Twitter account that millions follow. Followers now include not only humans but automated trading bots peeping in all the time to get crucial clues. Originally, this may well have started as a test of personal digital credibility or an experiment where he wants to know how influential he is around the world of finance. Or maybe, as per what my sixth sense suggests, a test of his own Trading-Bot i.e. an Artificially Intelligent system that needs such events to be triggered, only to analyse the data later and use it to train some mathematical machine learning models for the future. Whatever the root of the reason is, his words have rendered both the markets to behave like a roller coaster, at the same time launching a few seemingly worthless assets off to the moon!
Bitcoin achieved what no other was able to!
Bitcoin apparently came to the rescue of mankind in the form of a currency that can never be controlled, regulated, inflated, or deleted. In the last 12 years of its existence, it has been able to achieve something that no other system boasts, apart from the fact that no fraudulent transaction ever happened on this network. For the very first time in human history, the bitcoin system gave a naive user an opportunity to take part in a network of monetary transactions that could include every single human on Earth. Essentially a person sitting in remote parts of Africa can now transact with another person sitting on the opposite side of the globe, almost instantly. This inclusiveness is what blown Bitcoin’s popularity out of proportion, and soon Bitcoin proved to be the mother of all market penetrations.
2021 started with a “Signal”
Signal’s stock price had soared over the last weeks of Jan 2021 after Elon Musk, one of the world’s richest men, tweeted “Use Signal.” The tweet sent investors scrambling for shares of Signal Advance Inc., with the company’s stock price spiking from 60 cents per share last week to $38.70 on Monday. Even after a 50% drop on a Tuesday morning, the company’s stock price was still up 3,092% since the Tesla head honcho’s tweet, currently hovering near $19.15 per share on Tuesday morning.
However, one thing worth noticing here is that he was probably talking about the phone app Signal, not a medical supplies company based in Texas that happen to have an identical name on the US stock market listing.
Talk about a midas touch, rather, a midas tweet!
Gamestop and Crypto dance
It did not stop with Signal. Markets had to see some more.
- Bitcoin’s value jumped more than 20% to $38,566 after Elon Musk changed his personal Twitter bio to #bitcoin.
- His tweets have caused other assets to shift recently, including shares in GameStop and Etsy.
If reports are to be believed, some investors even called on regulators to get involved.
It is worth recalling that Musk has gotten into trouble for his market-moving tweets in the past, but it’s unclear how that applies legally to his tweets about cryptocurrencies, the entire landscape of which is mostly unregulated.
- The first time Musk tweeted about Dogecoin around July 17, 2020, when Musk shared a meme of Dogecoin passing the global financial system saying, “It’s inevitable.” Musk even replied to the tweet recently on April 16 with a watching eyes emoji.
- The Tesla CEO seemed to rally behind GameStop’s epic surge, tweeting out a link to the Reddit board that’s largely hyped the stock. Shares of GameStop were up more than 60% in after-hours trading on Tuesday following Musk’s tweet, which linked to the “wallstreetbets” Reddit page that has more than 2 million subscribers. The Tesla CEO tweeted “Gamestonk!!”
- Bitcoin prices surged to new highs on Monday, Feb 8, 2021, following Tesla’s announcement, reaching a price of at least $44,200. Tesla shares were up more than 2% Monday morning. In its SEC filing, Tesla warned investors of the volatility of bitcoin’s price. This was the first major sign Bitcoin showed in its directions towards 65K later.
Why show the love for Bitcoin now?
Tesla made it clear in its statement filed with its regulator, the Securities and Exchange Commission, that it sees bitcoin as a chance to diversify its cash and cash-equivalent holdings.
A pseudonymous blogger on Reddit even revealed that Tesla’s IT department was working on acquiring more and more bitcoin 1–2 months before notice to SEC. However, we cannot be sure whether this source was reliable or not. Reddit is known to be the source of many crypto rumors as well crypto insider information.
Initial suggestions made on the web indicated that buying 1.5 Billion worth of BTC may well be a calculated decision in order to avoid or save some tax in the absence of tough tax laws in the US. This apparently backfired when Biden Administration proposed a 40% tax on capital gains, including crypto.
A look at crypto Patterns: 2021 Vs 2017.
In 2021, stock markets and crypto, for that matter, are more sensitive to speculations. Internet and social media have now reached a higher level of penetration efficacy partly due to more smartphone usage and user preference-based logic(i.e. cookies). In the last 4 years alone, smartphone marketplaces have been flooded with new Apps claiming to be the best for trading stocks, cryptocurrencies, or both. Many of these organisations, in fact, sit at the source where rumours are created and propelled forward. There are reciprocative apps that feed rumours on social networks. These rumours, in many cases, are the sole reason for some unknown cryptocurrency to jump to an ATH.
In 2017, on the other hand, the number of portable internet users was less. And so was the number of apps supporting Stock and Crypto Investments. Institutional investment was far less in Crypto as compared to what it is today. Also, one thing that sets apart the two years is the magnitude of institutional interest shown in Bitcoin as an asset that can preserve value over time. In 2017 the percentage of individual investors in Bitcoin was way larger than what it is now in terms of the percentage of total coins in circulation.
In my opinion, the current sequence of events is a well-planned effort to experiment with the overall crypto ecosystem. Dogecoin is credible evidence to support this idea. As a coin, Doge does not enjoy the trust of even its creators. When a coin like Dogecoin can be made to crazily pump, pretty much anything on the crypto scene can follow. Bitcoin was not an exception and has indeed proven that it is not! At the end of the day, somebody wants to make a point. Somebody wants to showcase the fragility of the world of Cryptocurrencies. That they are as deceiving as gambling, still as cruel as 2008, the event that triggered it all!