Sunday, April 21, 2024

What’s Behind the Media’s Obsession With Bitcoin and Elon Musk?


Elon Musk is one of the most notable public figures in the world, having founded ambitious ventures SpaceX and Tesla, Inc. For the past year or so, he’s been in the news more and more for his involvement with Bitcoin and other cryptocurrencies. Just what is going on here, and why is the media so interested?

The Story So Far

Musk has been tweeting about Bitcoin and other currencies on and off since 2017. His earliest comments deny owning any cryptocurrency, eventually starting to warm up to the idea in 2019. During this time, he mentioned several cryptocurrencies, including Dogecoin and Ethereum, but this was essentially only a prelude.

The extent of Musk’s influence over cryptocurrency markets started to become clear when he began tweeting about Dogecoin more consistently in December 2020, and prices began to increase. This trend continued, with further statements about Bitcoin as well. In March 2021, Tesla began accepting Bitcoin as a payment option, the first concrete move by Musk towards supporting cryptocurrencies.

However, on May 8th, Musk appeared on Saturday Night Live. There, he called Dogecoin a hustle, leading to a dramatic drop in value over the following days. Musk similarly tweeted days later that Tesla would no longer accept Bitcoin payments, citing concerns over the cryptocurrency’s energy use. This also initiated a major drop, with Bitcoin only having briefly reached the pre-tweet value for several days in early September before dropping below again.

Neither Bitcoin nor Dogecoin has recovered to their all-time highs set in April and May of 2021, respectively. While Bitcoin is up from the seeming bottom of the latest drop in July, the future remains relatively uncertain given how turbulent prices have been since July of 2020.

Further Developments

The latest development is hard to place squarely at Musk’s feet. In June, Musk had tweeted about his intention to purchase a Shiba Inu puppy, the breed of dog associated with Dogecoin. He stated that he would be naming the puppy “Floki.” At the time, this phrase wasn’t associated with any cryptocurrency.

However, developers were quick to move and released a token called Shiba Floki. Musk would wait several months for his puppy to arrive, eventually tweeting on September 12th that “Floki has arrived.” Like clockwork, the value of the essentially unrelated Shiba Floki token rose 1,000%. It isn’t necessarily clear if Musk was even aware of the token’s existence, and yet the results of his influence here are indisputable.

Why All This Matters

The media has had a field day with Elon Musk and his Bitcoin antics. Various publications and programs have featured stories presenting the events in many different lights. Some seem more amused than anything, while some criticize Musk for the irresponsible use of his status as a public figure or even market manipulation for his own gain.

It wouldn’t be accurate to credit recent changes in Bitcoin value entirely, or even mostly, to Musk. Certainly, during the rise to the April all-time high, Musk was actively promoting Bitcoin. However, acceptance by more mainstream businesses and new legal precedents were also significant factors.

As for the sudden drop and slow recovery following his negative tweets around Bitcoin, this too has other factors at play. It highlights the volatility of the Bitcoin market overall, which is driven largely by speculation. Investors are fearful of a Bitcoin bubble, and panic selling over tweets is a symptom of these conditions, not Musk himself. These tweets, as well as renowned celebrity status has not gone unnoticed by scammers who are using Musk’s name and reputation to promote scams like the Yuan Pay Group

The difference in market cap between the all-time high and the relative low in July was over 500 billion USD. With these kinds of numbers in play, it’s clear why so many are paying attention. For Dogecoin, which Musk had much greater influence over, the results were even more staggering. The October 2020 market cap of 330 million USD swelled to nearly 40 billion USD in April 2021.

Elon Musk and Cryptocurrency Moving Forward

Musk might have reduced his commenting on cryptocurrency for the time being, but it is by no means clear that this will continue. He still has considerable influence, and the media is sure to notice any moves he might make. Spaceflight, satellite internet, and electric cars might have temporarily distracted him, but we might see Elon Musk make his return to the world of Bitcoin someday soon.

Herbert Wise
Herbert Wise
Infuriatingly humble organizer. Entrepreneur. Zombie guru. Professional creator. Future teen idol.

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