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#Bitcoin is a rather innocuous hashtag that undoubtedly gets used hundreds or thousands of times every day across social media. #Bitcoin and its many variants have been used millions of times on Instagram alone since its inception. So who could have ever imagined that a single use of #Bitcoin would cause the price of the world’s most valuable cryptocurrency to spike 15% in just one hour? Believable or not, that’s exactly what happened earlier this week.
In other news, it was quite a week in the investing world. Both Main Street and Wall Street were rocked as they watched the stock prices of many companies whose business models have been rendered obsolete by coronavirus and the digitalization of our world skyrocket far past their actual real-world value. Companies like GameStop and AMC Entertainment, whose stock prices have declined precipitously over the past several years, saw their stock prices gain 100%, 200%, 500% or more in a matter of hours.
It would have been hard to imagine a few years ago that one individual could have such a singular impact on financial markets. But such is the newfound power of the world’s newly minted richest man, Elon Musk.
What does Elon Musk have to do with the price pumps of Bitcoin, GameStop, and other assets? Well, let’s take a walk through his Twitter history for the week:
Earlier this week, a previously obscure Reddit forum called r/WallStreetBets decided to make hedge funds and other short sellers suffer huge losses by pumping the price of various stocks, including GameStop and AMC Entertainment as we saw above. Elon Musk jumped on the bandwagon shortly thereafter. His resultant tweet helped boost GameStop’s price over 150% by market open the following day and helped propel r/WallStreetBets into mainstream America.
Over the following two days, Musk also sent out a series of tweets complimenting the much maligned Cyberpunk 2077 video game and suggesting that Tesla’s newest car, the Plaid Model S, would allow passengers to play the game on the car’s built in video screen. Shares of CD Projekt, the game’s developer, soared by almost 13% shortly after Musk’s tweets went live.
Not content just to influence the traditional stock markets, Musk also took another opportunity to shill his favorite cryptocurrency, Dogecoin, as it rode a wave of retail mania similar to that initiated by r/WallStreetBets to new all time price highs. As one might expect, Musk’s influence over the Dogecoin community and its adherents caused the cryptocurrency’s price to rise nearly 200% over the following six hours.
Which brings us back to Elon Musk’s sure to become infamous addition of #Bitcoin to his Twitter profile.
It’s an open question for many whether Elon Musk is a certified bitcoiner, or just one of many closeted supporters who jump on the Bitcoin bandwagon when things in the crypto king’s community get exciting. This latest move in Musk’s Bitcoin journey is sure to convince many maximalists (i.e., individuals who don’t believe in any cryptocurrency other than Bitcoin) that he is a believer and builds upon recent comments Musk has made about his desires to potentially own the cryptocurrency:
- In late December 2020, Musk had a brief back and forth publicly on Twitter with Michael Saylor, the CEO of MicroStrategy who has made waves in the crypto space by placing the majority of his company’s corporate reserves into Bitcoin. In the exchange, Musk asked Saylor whether it would be feasible to place corporate reserves for such a large company like Tesla into Bitcoin.
- In early January 2021, Musk again elicited hopes that he had become a bitcoiner by implying in a tweeted response to Ben Mezrich, the author behind cult classics The Social Network and Bitcoin Billionaires, that he would not turn down the opportunity to be paid in Bitcoin.
It remains to be seen when, if ever, Musk will officially come out in full support of Bitcoin. However, the 15% jump in Bitcoin’s price brought about by Musk’s tacit support of it in his Twitter profile shows that he likely has just the type of clout in the minds of bitcoiners and the general public to send the cryptocurrency to new all-time highs.
So what should Elon Musk do with his newfound ability to single-handedly sway traditional and crypto markets?
The safe answer to this question is probably “nothing”. Regulatory authorities like the SEC and FTC are tasked with protecting the American public from market manipulators and would be hard-pressed to ignore blatant profiteering by someone of Elon Musk’s stature within society.
On the other hand, while it’s hard to imagine that Elon Musk is purposely pumping these assets for his own personal gain, it’s also unlikely that he’s oblivious to the impact that his tweets are having on the assets’ prices.
Feel free to sound off in the comments about what you think of Musk’s recent influence over asset prices.
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