He wasn’t alone, because the Chinese helped him a little by banning the use of cryptocurrencies. On 17 May, billionaire Elon Musk published a tweet denouncing the impact of Bitcoin on the environment. At issue: mining and its excessive energy consumption. Cryptocurrencies still remember this: the market collapsed 2 days later. The capitalisation of cryptos lost 1 billion dollars in one week in mid-May. He did it again on 4 June.
Elon Musk does it again on Twitter today
In early June, the cryptocurrency market confirmed a rebound. Bitcoin is approaching the $40,000 mark. But Elon Musk and Twitter are having a great love affair: in the middle of retweets about his SpaceX project, a broken heart followed by the Bitcoin symbol appeared on the night of 4 June.
A reference to the Linkin Park song “In the end”.
We know the billionaire’s taste for mystery and suspense. Could his reference to the Linkin Park song “In the end” and the dialogue in the image that reads “I’ve found someone else” lead us to believe that the billionaire’s heart is once again set on Dogecoin? Especially as another of his tweets, published on 2 June, expressly displays the face of the famous DOGE dog.
Bitcoin loses value
The effect of a tweet and a broken heart is not long in coming. Bitcoin lost just over 6% of its value, dragging other cryptocurrencies down with it. But is a single tweet enough to influence the price of cryptocurrencies?
Factors influencing cryptocurrency prices
It’s important to remember here that cryptocurrency prices are extremely volatile. Several factors are the cause of its fluctuations:
The law of supply and demand: like any economic market, the crypto market is no exception to the law of supply and demand. Low supply and high demand increase the value of a currency and vice versa.
The media brings news about cryptocurrencies every day. Some of these are enough to panic investors, others to encourage them, such as the announcement by the antivirus company Norton 360 that it is offering its users the chance to mine using one of its programs.
Political events: we are thinking in particular of the latest announcements by Joe Biden, the President of the United States, who wants to include cryptocurrencies in American tax returns.
Changes in government regulations. We recall in particular China’s announcements and their impact, in May.
The communities surrounding cryptocurrencies are also highly influential. They can single-handedly help a cryptocurrency take off or, conversely, get bored and cause a crypto to fall into the oblivion of the Web.
Whales also manipulate cryptocurrency prices
Crypto whales
An important phenomenon directly linked to the law of supply and demand we mentioned above, also impacts the price of the main cryptocurrencies. These are known as whales in crypto parlance.
Whales.
A “whale” is an individual or entity that holds a very large quantity of cryptocurrency. The movements (purchases and sales) of this very large “capital” are likely to have an impact on the entire market.
The example of Bitcoin
Barely a hundred people hold around 13% of all Bitcoins in existence, or just over €65 billion. As for those who own more than 1,000 Bitcoins, there are only 2,500 of them. Needless to say, small investors are finding it hard to keep up in a very tight Bitcoin market. The whales often take advantage of bull markets to sell, leaving the small fish behind.
Whales took advantage of the mid-May crash
But when the cryptocurrency market falls, the whales gorge themselves. According to Chainalysis, a blockchain analysis company, whales acquired 77,000 BTC in the week of 17 May, the week following Elon Musk’s tweet and the arrival of the crash. Many sales at a loss took place at the same time. Bitcoins acquired between 1 and 3 months before the crash were sold for $3.2 billion. 120,000 BTC were sold with losses in excess of 25%.
Elon Musk would be a Dogecoin whale
So what’s the link between whales and Elon Musk? That’s easy! Quite simply, he’s a big whale himself and holds 28% of DOGEs on his own. But it’s hard to prove, given the basic principle of DeFi: anonymity. But there are questions to be asked about his tweets: is he simply having fun, smiling as he watches the impact of his riddle tweets? Or is he hiding a desire to drive down BTC in favour of DOGE? Let’s not forget that his company Tesla holds 1 billion BTC. What would happen if the impulsive billionaire decided to liquidate them?
Whaling
Whales are shaking the cryptosphere. Elon Musk, who is suspected of being one, in addition to playing with billions and making people talk about him all the time, could well blow up the cryptocurrency market with the snap of a tweet. Yet some initiatives are trying to solve the problem, sometimes with very small means.
“WhaleAlert” analyses transactions
The company WhaleAlert tracks and analyses transactions on Blockchains in real time. “Our databases contain thousands of known addresses of individuals, exchanges and companies, and we are constantly adding to and updating them both manually and with the help of AI,” explain the creators on their website. The associated Twitter account publishes live updates of major transactions and has more than a million followers who contribute to the work by providing feedback.
MoonRat, an EarnBNB and anti-whale protocol.
MoonRat
Their press release on the Cointelegraph website on 2 June piqued our curiosity. MoonRat is a project of the Binance Smart Chain (BSC) network. It involves holding SMRAT tokens and then claiming BNB tokens each week. Their application has an “anti-whale” system. Just visit their website for more details. Stay tuned!
Conclusion
Elon Musk definitely has a big influence on the cryptosphere. He’s making news again today, with one of his usual tweets that only triggers a multitude of questions. It’s hard to know whether he’s having fun or deliberately contributing to the volatility of the cryptocurrency market. Suspected of being a whale, he’s showing that it’s probably essential to the survival of the cryptocurrency world that we give ourselves the means to become less volatile.
