Bitcoin Jumps Back Up Following Tweets from Elon Musk Regarding Acceptance of the Cryptocurrency

June 16, 2021
Sarah Gormley

After weeks of decline, Bitcoin’s price shot up following tweets from Tesla’s founder, Elon Musk, stating that Tesla would allow bitcoin as a form of currency once the company uses clean energy for mining. 

Back in February, Elon Musk revealed that $1.5 billion worth of bitcoin was purchased by Tesla. He also revealed the company’s intent to begin accepting bitcoin as a form of payment in the following months. In March, Tesla agreed to the use of bitcoin for transactions, just to turn around and take it back in May. 

With Tesla being an electric-car company with the goal of accelerating the world’s transition to sustainable energy, Bitcoin mining’s harmful effect on the ecosystem does not align with Tesla’s values in the slightest. When Musk got wind of how much powerful computer energy was used for cryptocurrency mining and its negative contribution to climate change, he halted purchases with bitcoin. 

Elon Musk’s social media activity has recently had a huge effect on the price of Bitcoin. In an interview on The Money Show, Magda Wierzycka, the CEO of a financial services company known as Sygnia and one of the richest women in South Africa, accuses Musk of price manipulation in the market. She feels strongly that if Bitcoin were a more traditional company, Musk should have been a suspect of investigation by the US Securities and Exchange Commission (SEC). 

Following these allegations, Musk tweeted that “Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving the market,” in an attempt to prove that he was not involved in any form of market or price manipulation. In this same tweet, Musk states that he will begin allowing bitcoin transactions again “when there’s confirmation of reasonable (~50 percent) clean energy usage by miners with a positive future trend.” The tweet was released on Sunday and saw a major effect on Bitcoin just hours later. The cryptocurrency went up about 9.3% on Sunday afternoon, hitting $39,372. This is the highest level that it has been at since June 3. As of Monday, it had decreased by one percent. 

The effects of this tweet on the price of Bitcoin go to show how large of an effect Elon Musk has on the company. It is interesting to think about how much a single tweet or message from a person of high power can have on a company — things really can change within seconds in the world of fintech.

 

Reference:

“Elon Musk’s Bitcoin Reversal Helps Push Prices Back Up.” South China Morning Post, 14 June 2021, www.scmp.com/tech/tech-trends/article/3137179/bitcoin-jumps-back-after-elon-musk-reverses-position-accepting.