Who knew 2 weeks ago that the cryptocurrency market was going to shed almost 40% of its value? And who knew that from the beginning of 2021 the uptrend was going to be such a crazy wild roller coaster ride. Yeah, no one I guess. But there are few points that are worthy to be made related to the recent events.
Nr 1. — The Elon Musk Factor
The first big bleep on the facts screen is Elon Musk’s intervention in the cryptocurrency space. Elon was, until recently, just tweeting his thoughts on the cryptocurrency, sometimes posting cryptic tweets, and sometimes expressing clear thoughts on the matter. However, when Tesla made a whopping $1.5 billion Bitcoin buy, the Bitcoin price has skyrocketed, sending it over $60 K. The whole world was ecstatic, especially the cryptocurrency fans who finally saw a big embrace from the richest man in the world. It was the right move at the right time from the right person, especially if that person was Elon, the tech guru that makes wild dreams come true on Earth and in space.
And Elon did not disappoint and he doubled down by tweeting supportive messages for ….DOGE coin, a relatively unknown Bitcoin clone coin made for fun, in the era when Bitcoin clones were mushrooming into the cryptocurrency land ( Litecoin being the first clone and thousands followed ..). The media bought into it too, Ellen DeGeneres’s show even pushed live on-air DOGE coin and Bitcoin pumps. The crypto prices continue to rise and rise with no end in sight.
Everybody was buying cryptos left and right and more than 30% of Americans owned cryptocurrencies by the end of April 2021.
Elon’s intervention will definitely be regarded as one of the most powerful factors that influenced the stellar rise of the cryptocurrency markets during this period.
And then Elon’s flip came about.
On the highly anticipated ( and controversial) night of Elon Musk hosting the SNL, the hammer came down and Elon basically trashed DOGE. The price plummeted and everybody was in shock looking for answers. Shortly after the event, Elon doubled down and started to criticize the huge electricity consumption that the Bitcoin network is using. As a result, the crypto markets took a nosedive and Elon made a lot of enemies globally.
Nr 2 — Bitcoins killswitch — the Bitcoins miners in China
I was always worried about the fact that most bitcoin miners are located in China for obvious reasons. And my worry materialized when shortly after Elon’s criticism of Bitcoins network electricity consumption, the Chinese government came out with their own announcement and plans to crack down on the cryptocurrency mining operations. If this would really happen ( similar threats were made in the past with no real action to date) then the impact would be catastrophic. And sure enough, this caused the further sinking of the crypto markets. To add insult to injury, news came out from the US regulatory authorities that they will start their own crackdown on the crypto owners and collect overdue taxes.
And this chain of events brings us to the current state of affairs where Elon Musk has since made a U-turn and now is “talking” to the Bitcoin miners community in North America about the mining process and how to improve it ( translation — make it greener).
Bitcoin price hovers around 40 K and apparently, the slide down has stopped.
Conclusion — Was it a coordinated attack on cryptos? Was this attack meant to facilitate a sweeter entry point in the market for institutional investments? ( as rumor has it). Time will tell in a few months. But Bitcoin is resilient and very hard to be stopped. It survived numerous attacks and panic selling episodes. Ethereum is slowly but surely establishing itself as a viable technical solution with real-world applications ( see Defi, Smart Contracts, and NFT). More viable technical solutions and platforms are emerging every day and this process will only enhance the useability case for cryptos.
The recent events demonstrated that Bitcoin is not dead (far from it) and it can not be killed. It is decentralized and no one can “own” it. Not even if the richest man on the planet and the two most powerful governments on the planet conspire to do so. ( I’m not saying they conspired but you never know right??)