Musk's tweets send bitcoin on a wild ride 1:03
New York (CNN Business) -
The prices of bitcoin, dogecoin, and other digital currencies have fallen more than 40% in recent weeks.
While Elon Musk is not solely responsible for it, he is certainly not being helpful.
Whether it's going to "Saturday Night Live" and joking that dogecoin is a "fraud" or having an epiphany that bitcoin mining may not be good for the environment, Musk's behavior has proponents of cryptocurrencies wishing he would stop tweeting and focus more on making cars.
Bitcoin fans are tired of Musk exerting so much influence over the short-term price movements of seemingly all cryptocurrencies.
Why does Elon Musk shake the cryptocurrencies every time he speaks?
“The people who followed Musk blindly have lost a lot of money.
They may have burned out and will never come back, ”said Alex Mashinsky, CEO and founder of Celsius, a cryptocurrency lending platform that offers digital tokens as a reward to customers, similar to a publicly traded company paying a dividend.
"The crypto community needs to be more responsible in the way it explains these assets and risk," added Mashinsky.
“Experts kept saying that we would never see a bear market for bitcoin again due to institutional interest, Square and PayPal, etc.
When you hear that, you have to worry.
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Cryptocurrency expert: Elon Musk "knows next to nothing"
Investors and analysts are especially bothered that all cryptocurrencies have risen and fallen along with bitcoin and dogecoin, in part because Musk has made conflicting comments about them.
Some crypto investors are also upset, to say the least, that a comment from Musk could move prices so wildly.
"Musk is very calculating," said Eloisa Marchesoni, an angel investor and cryptocurrency consultant.
"People are angry."
Tesla did not respond to requests for comment on Musk's views on bitcoin, dogecoin, and other cryptocurrencies.
But Musk hasn't shut up on Twitter, and for the moment, he's looking bullish.
Cryptocurrencies: the differences between bitcoin, ethereum, binance coin and dogecoin
Musk keeps tweeting about cryptocurrencies
In a tweet early Monday, Musk shared a parody of the famous "Jaws" movie poster.
A crumpled dollar replaced the hapless swimmer about to be attacked, and the infamous shark was replaced by a giant dog.
DOGE appeared in big red letters across the top, with the caption "You will never use the dollar again."
Musk also responded on Saturday to a Twitter follower who asked him, "What do you think of those who are mad at you about cryptocurrencies?"
Musk said that “the real battle is between fiat and crypto.
In general, I support the latter.
Musk is not the only reason for the sale.
Also contributing to the drop were fears of tighter regulation in China (where many bitcoin mines operate), as well as the possibility of more taxes on cryptocurrencies in the United States.
China's government puts the magnifying glass on bitcoins: it wants to end cryptocurrency mining
But Musk's constant talk about cryptocurrencies may be confusing some investors.
They may not realize that there are different use cases for bitcoin, which many investors treat as a kind of hedge against inflation (aka digital gold) as opposed to the second largest cryptocurrency, ethereum, whose blockchain is used for many non-fungible token (NFT) transactions that are becoming increasingly popular in the art and collectibles world.
Laugh at meme coins ... but don't buy them
Good luck finding someone with a compelling argument for why dogecoin and other joke coins like the shiba inu coin are necessary for something.
“I still don't understand what Musk's perspective is on dogecoin and I don't think the world either.
Why do you think it's valuable? ”Said Megan Kaspar, a director at Magnetic, a cryptocurrency investment firm.
Institutional investors are very thoughtful and they are not buying dogecoin just because Musk is pushing it.
But retail investors, who don't make a living from this, may not, ”he added.
Marchesoni urged long-term investors, so-called loyal HODLers, to ditch Musk and focus on bitcoin, ethereum, and other prominent currencies like cardano and XRP.
This week's crypto crash wiped out $ 1 trillion.
This is what happened
"There's nothing to worry about if you're a HODLer," Marchesoni said.
"But if you are a small investor, you are going to burn unless you stay away from meme currencies."
The bubble will burst.
It always happens with new assets.
It will explode and we are not yet at the climax, "he warned.
Mashinsky, founder of cryptocurrency lending platform Celsius, agreed that casual investors could soon tire of crypto volatility, leaving only long-term bulls who love that digital money is not tied to the whims of the government-backed central banks, as opposed to paper currencies.
Goodbye to occasional crypto investors?
"We are watching all the crypto tourists drift away," Mashinsky said.
“Many of them are not buying because they believe in financial freedom or long-term diversification.
They are just trying to take a quick trip.
This is why some experts also urge investors to look at so-called stablecoins such as tether, USD Coin, and USD binance.
These are cryptocurrencies pegged to the value of the dollar, the euro, and other forms of fiat money, as a way to protect your bets.
"Stablecoins are asset-backed so there is less volatility, but they can help mitigate inflation pressure," said Ken Nakamura, CEO of GMO-Z.com Trust Company, which launched the world's first regulated stablecoin that it is pegged to the Japanese yen.
Cryptocurrencies tumbled this week, but they are still the future
But make no mistake: bitcoin and other cryptocurrencies are still relatively young assets compared to stocks, bonds, and physical commodities and currencies.
Most cryptocurrencies are likely to be volatile investments for the foreseeable future, especially if Musk doesn't put the phone down.
“There is headline risk for cryptocurrencies and Musk is the case in point.
What he says still matters… at least for now, ”said Ed Egilinsky, manager and head of alternative investments at Direxion.
Investors have to consider why they are buying.
Hopefully, it's to diversify, ”Egilinsky said.
“But there is not a long enough history to say that bitcoin or others are a true hedge of inflation.
This is still more of a speculative impulse trade. '
CryptocurrenciesElon Musk