What makes crypto so volatile, is it Elon Musk?
Whether you're just starting out or have already dipped a toe into the pool... In this series brought to you by Revix, The Money Show's Business Unusual presenter, Colin Cullis offers answers on how to navigate your way through the world of digital currency.
Click below to listen while you read...
If you've missed the first three episodes, be sure to catch up below:
- Episode 1: Crypto explained - a guide to understanding digital money
- Episode 2: Crypto regulations - friend or foe?
- Episode 3: To invest now or later - can one time the cryptocurrency market?
In this episode, Cullis and the Founder and CEO of Revix, Sean Sanders look at the influences and influencers that affect cryptocurrencies.
Elon Musk is no stranger to posting controversial statements on Twitter. His tweets have the power to change the trends of the crypto market, resulting in dramatic price surges or crashes. Instead of posting about the stock market, he has taken to posting cryptic messages about cryptos – a currency that is not regulated – leaving investors unsure of whether he is a supporter or critic of Bitcoin and others reading ulterior motives in his seeming support of altcoins like Dogecoin.
Why does he do it and what will it take to get him to stop?
While we cannot stop Musk from tweeting, Sanders advises that we separate the billionaire's actions from what he's posting on Twitter.
"He's invested $1.5 billion through Tesla into Bitcoin. He has then gone out and shown opposition to the way that we mine Bitcoin – the high energy usage, the carbon emissions and all of the rest that come from coal-fired power plants and all the rest – and that then has, sort of, brought the crypto market down when he's posted about that."
According to Sanders, Musk's schizophrenic behaviour toward the crypto space lends itself to a superiority complex derived from his enjoyment of being powerful enough to move the markets.
What has his impact been on investors' willingness to invest when the volatility has been fueled by tweets?
Dogecoin started as a joke.
Two software engineers thought it would be funny to create a cryptocurrency to rival Bitcoin. The crypto's worth remained less than $0.01 from its creation in 2013 to the end of 2020 before soaring to over $0.63 following Musk's endorsement in May of 2021. While the price did crash to $0.20 soon after – this is a prime example of the billionaire's influence on his followers, who essentially helped Dogecoin achieve a market cap of $30 billion.
To this, Sanders says: "Elon Musk is crypto's biggest influencer."
"Since there is a lot of volatility from his tweets..." To those looking to enter the crypto market, Sanders suggests that investors buy in at a discount immediately after a negative tweet from Musk and sell off after a positive tweet to make a substantial profit.
In time, the market and the value of the system will be too big for one person to change dramatically but until then, it will be a part of the crypto landscape, says Cullis.
Visit revix.com to find out how easy it is to start investing in this exciting new space.
This article first appeared on 702 : What makes crypto so volatile, is it Elon Musk?
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