Musk Messes with Bitcoin Maximalists

The thing about an abusive relationship is that it’s hard for the victims to get out.

So when Elon Musk first embraced Bitcoin, he was heralded as the leader of the cryptocurrency movement, the embodiment of Satoshi Nakamoto, when the real Satoshi was nowhere to be found.

Here was a real-life Ironman equivalent, using Tesla’s (+3.16%) sizeable bounty to make a significant investment into Bitcoin and talking it up on Twitter (+3.15%).

The Bitcoin maximalists couldn’t be happier.

Until Musk turned on them.

Over the weekend, Musk implied over a Twitter exchange that Tesla may sell or has sold its holding of Bitcoin, sending Bitcoin sliding below US$45,000 at one stage, for the first time in three months.

At one stage in the Twitter exchange, Musk seemed to agree with a Twitter post suggesting that Tesla should divest what at one point was a US$1.5 billion stake in Bitcoin.

Last Wednesday, Musk was attributed for causing a US$10,000 plunge in Bitcoin after declaring that Tesla would no longer accept the cryptocurrency as payment for its highly coveted electric vehicles.

And a few days earlier, while hosting “Saturday Night Live.” Musk joked that Dogecoin, a meme cryptocurrency that he had previously promoted, was a “hustle” which sent its price sharply downwards, only to later tweet that he was working with Dogecoin developers to improve transaction efficiency.

Move over Donald Trump, Twitter’s got a new troll and he’s helping draw eyeballs back to the app.

Musk’s latest fracas with the Bitcoin community started with a tweet from someone using the handle @CryptoWhale which said,

“Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him…”

Musk’s one-word reply “Indeed” was enough to send shockwaves through the Bitcoin ecosystem and investors dumping the cryptocurrency en masse.

Instead of enjoying the summer weather and a picnic, Musk spent most of Sunday hitting back at several different Twitter users who criticized his change of stance on Bitcoin last week, a move he alleges was sparked by environmental concerns over the energy consumed in securing the Bitcoin blockchain.

But does anyone really believe that Musk, who literally taught himself rocket science, didn’t know that Bitcoin consumed a lot of energy to secure the blockchain?

Musk’s musings overshadowed the myriad other events happening in the cryptosphere last week, which in and of themselves (under what passes off as normal for cryptocurrencies), would have been sufficient to create dramatic levels of volatility.

At the end of the first quarter, Tether, the world’s largest stablecoin, allegedly backed by U.S. dollars, disclosed reserves in a breakdown that showed a large portion in unspecified commercial paper.

While billionaire hedge fund manager Steven Cohen’s Poin72 Asset Management announced that it would begin trading cryptocurrencies.

And the hackers who hacked the Colonial Pipeline demanded a US$5 million ransom in untraceable cryptocurrencies, while Binance, the world’s largest cryptocurrency exchange was reported by Bloomberg to be under investigation by the U.S. Justice Department and the Internal Revenue Service in relation to possible money-laundering and tax offenses.

In and of themselves, each of these events could have affected the price of cryptocurrencies both upwards and downwards but the cryptosphere seems to be very much distracted by the tweets of a single individual.

And for despairing Bitcoin maximalists, appalled at what appears to be a snub by Musk, the Donald Trump Twitter debacle should provide some comfort – democracy is bigger than a single demagogue, and Bitcoin is bigger than the tweets of a single CEO.

So desperate have cryptocurrency champions been to find a rallying figure in Musk, that even something as significant as Steven Cohen’s Point72 Asset Management jumping into cryptocurrencies can get glossed over.

While some investors may lament Musk turning sour on Bitcoin, like a jilted lover, they’re missing the forest for the trees – institutional participation, the very thing that cryptocurrency advocates have been crying out for years for, is arriving.

So while Bitcoin maximalists weep over the loss of Musk, those tears are clouding their ability to see that the bigger picture of institutional participation is just on the horizon and you can tweet on it.