Crypto billionaires, while sometimes not fully influencing the volatility of crypto assets, significantly affect the stability of the crypto market when they make jokes either on their social media pages or in front of cameras. Elon Musk, after suspending Bitcoin in May, he says he is thinking about reinstating it. Why do such billionaires confuse the crypto market?
New crypto investors need to know that while the crypto market is profitable, it is also infested with manipulators and a lot of fake news that could drag them into big losses and sometimes, but not always, profits.
Business tycoon, Tesla and SpaceX CEO, Elon Musk likes to joke in the media and his jokes cause earthquakes of high magnitudes on the crypto market. In May 2020, Tesla, under Musk's leadership, suspended Bitcoin transactions citing environmental concerns. Since then, Bitcoin has struggled to gain stability. This was a continuation of the damage Tesla caused in April after it sold 10% of its Bitcoin holdings and the cryptocurrency's value fell to one of its lowest levels in months. A quick tweet from Musk that Tesla would stop accepting Bitcoins urged people to sell their Bitcoins, and three months later he posted an opposite tweet about considering resuming Bitcoin transactions. Sounds like a pump and dump scheme.
Now that it's clear how much turmoil crypto tycoon comments could make in the crypto market, it's no surprise that Dogecoin, which was originally created as a "fake coin," is gaining momentum with Elon Musk's supportive tweets. On April 17, Musk tweeted that he had purchased Dogecoin for his child to be a toddler holder and that alone drove the price of Dogecoin 17% higher. Through the joking posts, Elon Musk has Dogecoin rising 6,000% from the 2020 levels.
In the same way, J.P Morgan, Bitcoin's biggest enemy turned friend, rattled the crypto market when he called Bitcoin a "fraud". A year later, his bank, Morgan Stanley, also one of the largest companies in the world by total revenue, became the first to accept Bitcoin as a legal asset class, driving up Bitcoin's price.
However, to go from rags to riches, traders need to base their decisions on independent research and thought. Opinions from crypto tycoons can be useful, but let us not forget that they are also humans, so their opinions are often subjective. Moreover, sometimes such opinions are aimed at manipulating the market. For example, Elon Musk has been accused of purposeful manipulation by some community representatives. Some have even argued the need for a SEC investigation into his actions, as reported by CoinIdol, a world blockchain news outlet. For this reason, opinions are far less trusting than they appear.
Crypto investing can become profitable in the long run. Although it is sometimes possible to earn returns on crypto investments, most of the benefits are realised gradually and by the sweat of your brow. From market analysis to regulations and jokes, it is important to pay attention to any form of updates from the community.
Believing social media and taking comments from big investors in the industry at face value is detrimental to investing. Thorough research to verify information avoids unnecessary losses.