Originally posted this article on Sesterce Blog in 2021,
Photo by George Pagan III on Unsplash https://unsplash.com/@gpthree
TLDR: Although the entire 2021 was the year of the bull market, many lost their investments even when their positions were long. This post was a mild personal rant backed by data about how certain people who hold a position of influence manipulate the market for fun.
Learning: The cryptocurrency market needs to mature past the point where a few celebrity’s opinions should become irrelevant to the market.
On May 1st, 2021. I was holding $2000 worth of BTC in one of my exchange accounts and the BTC price was hovering around $56K. Like many people, I too was bullish about BTC’s current trend. I decided to go LONG with 2X leverage. Next week the price rose to 57K and on May 9th it reached $57,958.
Being so bullish about BTC, I didn’t bother putting a stop loss.
Surprise! surprise! The rest of the story is engraved in BTC history. Over the week Bitcoin kept on falling while many of us were still being very bullish till we received a rude shock of BTC dropping to $38000 and many got their position liquidated to ZERO.
Whether I knew about a certain person -Elon- on twitter-with millions of followers- was trash-talking about BTC not being environment friendly or overpriced?
Did I know about the latest news about China banning crypto mining?
I DID, but I considered it old news served again.
In hindsight, I understand that what I did can only be explained as pure stupidity. However, I still consider myself luckier than many; since a significant portion of my assets still survived in other crypto wallets (no need to look for any jobs at McDonald’s)
But the moral of the story is NOT about me sharing ‘trading lessons’ with you or demonstrating the ‘volatility of Bitcoin’(Seriously guys, always put a stop loss while you trade)
It’s about how much sway a few celebrities can hold on cryptocurrencies that about 50% of the value is wiped clean overnight by simply talking trash on Twitter.
Having a celebrity talking about Bitcoin & cryptocurrency is not a bad thing at all.
It only encourages adoption and benefits in the long term. Musk’s involvement in the crypto world is giving the industry some much-needed mainstream attention.
Whether it’s his foray into the world of non-fungible tokens (NFTs), tweeting about Dogecoin, or simply talking about crypto in general, Musk’s comments have helped crypto be that much more popular among the general public.
And to support our claim we are lucky that Blockchain Research Lab has already done the research to support our claim
On January 29, 2021, Elon Musk unexpectedly changed the description of his Twitter account to #bitcoin. The price of Bitcoin rose by approximately $6,000 in a matter of hours, increasing its market capitalization by $111 billion.
Was there a relation between Elon’s Bio change and the BTC price spike?
You can arguably say that Elon’s Twitter activities had a significant impact on the return and trading volume of the corresponding cryptocurrency (Bitcoin or Dogecoin) in the following minutes and hours. A few of my friends who actively trade crypto started following Elon to align their trading strategy as per his tweets.
Here are a few of these events as published by Blockchain Research Lab.
Six cryptocurrency-related events on Elon Musk’s Twitter account
You can observe the hard-to-miss spike in Price and Trading Volume after Elon’s tweet on Doge.
You can enjoy reading the full study here: link.
This shows that Elon’s tweet can move markets and his praise of specific cryptocurrencies can potentially lead to an increase of $111 billion in Bitcoin’s market capitalization, a different tweet could also wipe out a similar value.
Although Elon is not a Whale who manipulates market trades, he holds significant clout of influence via his followers, especially on Twitter.
However, Elon’s sudden reversal in stance & negative tweets have also sent crypto prices crashing as well. Over the past week, Ethereum & Bitcoins prices have crashed by almost 50 percent. Musk’s tweets alone have caused frenzies amongst people leading to a mass sell-off in the markets, and many crypto investors are frustrated by this.
Some are even claiming that Musk is manipulating the cryptocurrency markets for his gain. We’ve already seen the SEC step in to charge Musk in regards to his tweets about Tesla shares. Since financial regulators aren’t going to step into the crypto markets, investors are taking it up themselves to stop Musk’s reckless tweeting. We’ve seen new groups and projects spring up, such as StopElon, a type of meme coin dedicated to raising awareness about Musk’s supposed power over the crypto market.
Musk is not the only celebrity who moves the Crypto market, here are a few of them
1. Anthony Pompliano
2. Vijay Boyapati
3. Simon Dixon
4. Max Keiser
5. Saifedean Ammous
6. Brady Swenson
7. Plan B
8. Andreas Antonopoulos
9. Meltem Demirors
10. Jack Mallers
11. Stacy Herbert
12. Raoul Pal
13. Michael Saylor
14. Peter McCormack
15. Dan Held
16. Super Crypto (God, Gold, & Geopolitics)
Although most of these influencers are great advocates of Bitcoin adoption and maximalists, which is inherently a good thing. But they also hold the potential to introduce FUD & bring the crypto market down.
Such power in a few can obstruct cryptocurrencies to become mainstream. Mass adoption of Bitcoin & other cryptos in this current rigged market where it keeps dropping or rising by twenty percent at the whims of these celebrities.
Can you #HODL when the market’s volatility wreaks havoc, since very few can afford to do that, #HODLing cannot be a solution.
Unfortunately, there isn’t any simple straightforward solution. Cryptocurrencies need these celebrities for the much-needed push for mass adoption. This means we all should be prepared for those bumpy rides for which bitcoin is famously known.
A regulating body like the SEC might temporarily solve this problem, but it is difficult to implement such a thing for cryptocurrencies. Blockchain & Bitcoin by nature is designed to avoid anyone to govern/regulating it i.e decentralized and self-regulated by those who have adopted it.
Where people don’t dump their assets at the whims of a few notorious celebrity tweets who manipulate the market by banking upon their followers.
Here is a meme that made #BTC fall by 2K
Here is a response from Binance CEO who understands the problem here
Greater power with great responsibility, great. Great power with random “humor”, not great, and not funny.
The cryptocurrency market needs to mature past the point where a few celebrity’s opinions become irrelevant to the market. Maybe in the next 5–10 years, we might witness such maturity.
Till then just have to hang on tight through some massive turbulence