The past week was quite the rollercoaster in the cryptocurrency market – both in terms of price and sentiment.
And by sentiment, I mean the community’s affection to one of the most influential, popular, and rich people on the planet. Of course, I’m talking about Tesla’s CEO – Elon Musk.
Before I go in details with my opinion as to why I believe Bitcoin doesn’t need him (or anyone else of his kin, for that matter) and if it does – it means it failed, I’m going to give a short outline on what happened that caused bitcoin’s price to drop so sharply in the past few days.
What the Hell Happened?
Elon Musk’s relationship with Bitcoin is one that went through quite a few phases. It’s important to differentiate, though – as he himself stated, he draws a line between specific assets and crypto in general.
Without going too much back in time, let’s see what happened in 2021. In January, he put Bitcoin as the only word in his Twitter bio.
It was also around that time when he said that he doesn’t mind getting paid in the primary cryptocurrency.
In February, he continued showing his positivity on Bitcoin.
“I was a little slow on the uptake… I do think at this point that bitcoin is a good thing.” – He said, adding that he’s a supporter.
It’s worth noting that, back then, the overwhelming majority of people were highly enthusiastic that one of the brightest minds of our generation has jumped on the bitcoin bandwagon.
Right around that time, Tesla, the company that Musk spearheads, announced a whopping $1.5 billion BTC buy, sending the price to a new all-time high and becoming the stepping stone for what would later become an even more impressive surge.
At the time, though, Musk threw one comment which raised a few eyebrows. It came as a response to a Bloomberg interview of Changpeng Zhao – the CEO of Binance.
“Tesla’s action is not directly reflective of my opinion. Having some Bitcoin, which is simply a less dumb form of liquidity than cash, is adventurous enough for an S&P500 company.”
It’s also worth noting that during all this time, Musk has been heavily pushing Dogecoin (DOGE) – a meme-inspired cryptocurrency with little to no development activity in the past few years, which was admittedly created as a joke.
Nevertheless, a month after its bitcoin buy, Tesla also announced that the company will accept bitcoin payments for its vehicles, sending the price yet in another considerable advance.
Everything was going great for crypto proponents, and not many were those who were concerned with Musk’s involvement in the field – on the opposite, many called for other companies that will follow Tesla’s example and add BTC to their balance sheets.
In retrospect, it may have been inevitable. See what I did there? Of course, not many were those who were expecting a complete u-turn of the kind, though going back through the history of events could have hinted that we had this coming.
A few days ago, on May 12th, Tesla announced that it had stopped accepting bitcoin as payment for its products. The company cited environmental concerns with the mining process, and Musk was very quick to support it.
— Elon Musk (@elonmusk) May 13, 2021
Quickly enough, the Bitcoin community reacted in a somewhat expected yet (in my opinion) unfortunate way. Proponents started calling Musk a hypocrite for creating government-subsidized vehicles while using fossil fuels to send his rockets to outer space.
While he didn’t really bat an eye for a few days, it seems that people got under his skin. The tipping point came on May 16th when Musk responded to a question pinning Bitcoin and Dogecoin against each other. He said that if DOGE manages to “speed up block time 10x, increase block size 10x & drops fee 100x – then it wins hands down.”
This fired up the community even more. Following up were a few comments on Peter McCormack’s Twitter thread that he saw as “obnoxious” and making him “want to go all-in on Doge.”
Furthermore, Musk said that “Bitcoin is actually highly centralized, with supermajority controlled by a handful of big mining (aka hashing) companies.” His irritation was evident in one more of the answers under the same thread:
Hey cryptocurrency “experts”, ever heard of PayPal? It’s possible … maybe … that I know than you realize about how money works.
— Elon Musk (@elonmusk) May 16, 2021
Things Escalated Quickly
At this point, it was becoming pretty evident that Musk’s tweets have a direct impact on bitcoin’s price, which was bleeding at the time.
Many shared the opinion that bitcoin proponents shouldn’t piss off Elon Musk because of price implications. And, to clarify, I do not share this belief – if Musk is spreading false information or, at the very least, highly questionable facts without serious research, he should be called out for it, irrespective of what it does to bitcoin’s price. But more on that later.
Musk also went so far as to agree with an account that many in the community consider to be a scammer.
— Elon Musk (@elonmusk) May 16, 2021
He later confirmed that Tesla hadn’t sold any bitcoins.
Down to the Issue
Bitcoin doesn’t need to rely on Elon Musk anymore, so that it needs any other billionaire endorsing it. Bitcoin was here long before Musk started getting involved publicly in cryptocurrency and long before Tesla accepted it for payments and put it on its balance sheet.
Bitcoin was here before Michael Saylor started endorsing it and before MicroStrategy bought almost 100K of it.
Bitcoin was here before Paul Tudor Jones invested in it and before Anthony Scaramucci started shilling it.
Bitcoin went through massive challenges in the face of a few hard forks, and the market consensus is as definitive as it gets. Despite the recent drop in bitcoin’s dominance, it’s still worth 40% of the entire cryptocurrency market.
But we’re in a bull market. In a bull market, people tend to forget about fundamentals and fixate on price. This led to the glorification of individuals who’ve done little to nothing to push bitcoin forward (don’t read everyone from the abovementioned, I don’t necessarily mean any of them).
Catering to the whims of a single person or company is just as bad as being centralized. Bitcoin is sound money that users can take full custody of and still be easily portable and verifiably scarce. And it surely doesn’t need billionaires endorsing it. Remember – people change their minds, and Musk is the perfect example.
Whether he knew of bitcoin’s “mining issues” in advance or not is absolutely irrelevant – the fact is that he has a serious platform to voice his opinions, and his opinions move markets, and more importantly – they influence people.
I may not necessarily agree with everything McCormack said and the tone he used (though amusing, I can also see how it can be taken as an offense), but he’s 100% right about one thing – Elon Musk is deleting hard work without putting in the research.
The Other Issue
Every single post that Musk puts on Twitter is absolutely swarmed by crypto-related comments. This shows the state of affairs at the moment – the market is saturated with people who fixate on one thing only – “when moon?”
The response to Musk’s bitcoin comments was also completely shocking for me. The toxicity coming from some of the most popular BTC proponents was downright baffling to me.
If I know one thing about disputes, it’s that using ad hominem arguments means you lose.
*The above is the sole opinion of the writer. Featured image courtesy of Financial Times