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Elon Musk Keeps Trolling the Bitcoin Purists

Elon Musk Keeps Trolling the Bitcoin Purists

The cryptocurrency’s price hangs on Musk’s every tweet, trashing the narrative that Bitcoin’s price surge is based on solid fundamentals.

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Bitcoin troller-in-chief
Bitcoin troller-in-chief Photographer: Liesa Johannssen-Koppitz/Bloomberg

The future of money apparently looks something like this: Tesla Inc. techno-king Elon Musk posts a one-word tweet — “Indeed” — that suggests his company may have sold its stash of Bitcoin. The cryptocurrency’s price sinks to a three-month low. Musk then posts a new tweet,  clarifying that Tesla hasn’t sold any. Prices perk up again. 

Cue much gnashing of teeth as Bitcoiners, already incensed by Musk’s attack on the cryptocurrency’s wasteful carbon footprint last week, cry foul over the billionaire’s outsize market influence. As tiresome as it is to see Musk repeatedly toy with markets via his 55 million followers, it’s hard to feel sorry for the crypto-punters.

Musk’s trolling keeps undermining the insistence of true Bitcoin believers that their favorite token is bigger than any individual, and that the recent price boom is based on solid fundamentals. The original cryptocurrency’s recent 20% drop over five days began with a Musk tweet announcing Tesla was suspending Bitcoin payments because of inefficient, environmentally unfriendly mining algorithms that suck up large quantities of energy. The latest confused price swings over Tesla’s crypto portfolio show how this speculative market can turn on a dime.

By explicitly leaving the door open to more energy-efficient alternatives to Bitcoin, Musk is also boosting the price of tokens that might fit the bill. Some of the best-performing digital tokens over the past week are those viewed as potentially Tesla-friendly by their supporters: The likes of Polygon and Cardano, which are up 80% and 25%, respectively, hand more mining power to those with the biggest pile of coins (“proof of stake”) rather than those with the most powerful computing power (“proof of work,” as used by Bitcoin). 

Billionaire’s Plaything

Elon Musk’s antics counter the utopian Bitcoin story of unstoppable adoption

Musk’s trolling keeps undermining the insistence of true Bitcoin believers that their favorite token is bigger than any individual, and that the recent price boom is based on solid fundamentals. The original cryptocurrency’s recent 20% drop over five days began with a Musk tweet announcing Tesla was suspending Bitcoin payments because of inefficient, environmentally unfriendly mining algorithms that suck up large quantities of energy. The latest confused price swings over Tesla’s crypto portfolio show how this speculative market can turn on a dime.null

By explicitly leaving the door open to more energy-efficient alternatives to Bitcoin, Musk is also boosting the price of tokens that might fit the bill. Some of the best-performing digital tokens over the past week are those viewed as potentially Tesla-friendly by their supporters: The likes of Polygon and Cardano, which are up 80% and 25%, respectively, hand more mining power to those with the biggest pile of coins (“proof of stake”) rather than those with the most powerful computing power (“proof of work,” as used by Bitcoin). 

Billionaire’s Plaything

The reframing of crypto as a problem to solve has turned the frantic gold rush into a green scramble — even if it’s unclear whether that in itself is going to suddenly create more practical use cases.

One can debate how meaningful this all is in terms of who will buy what and when, but what’s clear is that one of the wealthiest people in the world is exposing cracks in the narrative of crypto adoption: that it was supposed to be a straight shot to higher and higher prices. Whatever qualms regular corporate treasurers had over sticking Bitcoin on their balance sheet had been drowned out by the tech influencers promising to keep buying — including Musk, who threw $1.5 billion at crypto back in February.

By hitting the pause button, Musk has suddenly made the conversation among the Silicon Valley billionaire class and their laser-eye supporters more tortured. Jack Dorsey’s Square Inc. recently looked on the back foot when it said it would continue to assess its Bitcoin investment “on an ongoing basis,” while also trying to make it greener.

By committing the unpardonable sin among Bitcoiners of suggesting the original cryptocurrency is flawed, Musk is also hinting that picking future winners in an increasingly crowded field of digital-cash competitors — including Facebook Inc. — isn’t straightforward. Musk has split his Bitcoin allegiance with satirical spinoff Dogecoin, giving it a more serious sheen by talking about improvements that would let a token win “hands down” — such as faster transaction capacity and lower fees — and hinting that “maximalists” who swear by Bitcoin have it wrong.

The future of money apparently looks something like this: Tesla Inc. techno-king Elon Musk posts a one-word tweet — “Indeed” — that suggests his company may have sold its stash of Bitcoin. The cryptocurrency’s price sinks to a three-month low. Musk then posts a new tweet,  clarifying that Tesla hasn’t sold any. Prices perk up again. 

Cue much gnashing of teeth as Bitcoiners, already incensed by Musk’s attack on the cryptocurrency’s wasteful carbon footprint last week, cry foul over the billionaire’s outsize market influence. As tiresome as it is to see Musk repeatedly toy with markets via his 55 million followers, it’s hard to feel sorry for the crypto-punters.null

Musk’s trolling keeps undermining the insistence of true Bitcoin believers that their favorite token is bigger than any individual, and that the recent price boom is based on solid fundamentals. The original cryptocurrency’s recent 20% drop over five days began with a Musk tweet announcing Tesla was suspending Bitcoin payments because of inefficient, environmentally unfriendly mining algorithms that suck up large quantities of energy. The latest confused price swings over Tesla’s crypto portfolio show how this speculative market can turn on a dime.null

By explicitly leaving the door open to more energy-efficient alternatives to Bitcoin, Musk is also boosting the price of tokens that might fit the bill. Some of the best-performing digital tokens over the past week are those viewed as potentially Tesla-friendly by their supporters: The likes of Polygon and Cardano, which are up 80% and 25%, respectively, hand more mining power to those with the biggest pile of coins (“proof of stake”) rather than those with the most powerful computing power (“proof of work,” as used by Bitcoin). 

The reframing of crypto as a problem to solve has turned the frantic gold rush into a green scramble — even if it’s unclear whether that in itself is going to suddenly create more practical use cases.

One can debate how meaningful this all is in terms of who will buy what and when, but what’s clear is that one of the wealthiest people in the world is exposing cracks in the narrative of crypto adoption: that it was supposed to be a straight shot to higher and higher prices. Whatever qualms regular corporate treasurers had over sticking Bitcoin on their balance sheet had been drowned out by the tech influencers promising to keep buying — including Musk, who threw $1.5 billion at crypto back in February.

By hitting the pause button, Musk has suddenly made the conversation among the Silicon Valley billionaire class and their laser-eye supporters more tortured. Jack Dorsey’s Square Inc. recently looked on the back foot when it said it would continue to assess its Bitcoin investment “on an ongoing basis,” while also trying to make it greener.

By committing the unpardonable sin among Bitcoiners of suggesting the original cryptocurrency is flawed, Musk is also hinting that picking future winners in an increasingly crowded field of digital-cash competitors — including Facebook Inc. — isn’t straightforward. Musk has split his Bitcoin allegiance with satirical spinoff Dogecoin, giving it a more serious sheen by talking about improvements that would let a token win “hands down” — such as faster transaction capacity and lower fees — and hinting that “maximalists” who swear by Bitcoin have it wrong.null

Musk is no fool, and he may have ulterior motives: perhaps a plan to remake Dogecoin in his own image, or some kind of TeslaCoin that serves his interests. In a market where the greater fool trade reigns supreme, who would turn their nose up at this? If the current speculative mood is anything to go by, even a coin that looks like a blatant money-and-power grab by a billionaire might get snapped up.

There have been several crypto boom-and-bust cycles. The latest boom has been accelerated by falling trust in traditional institutions and increased time spent online amid Covid-19. In the kingdom of the blind, it looked for a while like the laser-eyed man was king. Now the techno-king appears to be making his move. Unless, that is, the no-less-influential regulators who are stepping up their scrutiny of crypto markets get there first.

The future of money apparently looks something like this: Tesla Inc. techno-king Elon Musk posts a one-word tweet — “Indeed” — that suggests his company may have sold its stash of Bitcoin. The cryptocurrency’s price sinks to a three-month low. Musk then posts a new tweet,  clarifying that Tesla hasn’t sold any. Prices perk up again. 

Cue much gnashing of teeth as Bitcoiners, already incensed by Musk’s attack on the cryptocurrency’s wasteful carbon footprint last week, cry foul over the billionaire’s outsize market influence. As tiresome as it is to see Musk repeatedly toy with markets via his 55 million followers, it’s hard to feel sorry for the crypto-punters.null

Musk’s trolling keeps undermining the insistence of true Bitcoin believers that their favorite token is bigger than any individual, and that the recent price boom is based on solid fundamentals. The original cryptocurrency’s recent 20% drop over five days began with a Musk tweet announcing Tesla was suspending Bitcoin payments because of inefficient, environmentally unfriendly mining algorithms that suck up large quantities of energy. The latest confused price swings over Tesla’s crypto portfolio show how this speculative market can turn on a dime.null

By explicitly leaving the door open to more energy-efficient alternatives to Bitcoin, Musk is also boosting the price of tokens that might fit the bill. Some of the best-performing digital tokens over the past week are those viewed as potentially Tesla-friendly by their supporters: The likes of Polygon and Cardano, which are up 80% and 25%, respectively, hand more mining power to those with the biggest pile of coins (“proof of stake”) rather than those with the most powerful computing power (“proof of work,” as used by Bitcoin). 

Billionaire’s Plaything

The reframing of crypto as a problem to solve has turned the frantic gold rush into a green scramble — even if it’s unclear whether that in itself is going to suddenly create more practical use cases.

One can debate how meaningful this all is in terms of who will buy what and when, but what’s clear is that one of the wealthiest people in the world is exposing cracks in the narrative of crypto adoption: that it was supposed to be a straight shot to higher and higher prices. Whatever qualms regular corporate treasurers had over sticking Bitcoin on their balance sheet had been drowned out by the tech influencers promising to keep buying — including Musk, who threw $1.5 billion at crypto back in February.

By hitting the pause button, Musk has suddenly made the conversation among the Silicon Valley billionaire class and their laser-eye supporters more tortured. Jack Dorsey’s Square Inc. recently looked on the back foot when it said it would continue to assess its Bitcoin investment “on an ongoing basis,” while also trying to make it greener.

By committing the unpardonable sin among Bitcoiners of suggesting the original cryptocurrency is flawed, Musk is also hinting that picking future winners in an increasingly crowded field of digital-cash competitors — including Facebook Inc. — isn’t straightforward. Musk has split his Bitcoin allegiance with satirical spinoff Dogecoin, giving it a more serious sheen by talking about improvements that would let a token win “hands down” — such as faster transaction capacity and lower fees — and hinting that “maximalists” who swear by Bitcoin have it wrong.null

Musk is no fool, and he may have ulterior motives: perhaps a plan to remake Dogecoin in his own image, or some kind of TeslaCoin that serves his interests. In a market where the greater fool trade reigns supreme, who would turn their nose up at this? If the current speculative mood is anything to go by, even a coin that looks like a blatant money-and-power grab by a billionaire might get snapped up.

There have been several crypto boom-and-bust cycles. The latest boom has been accelerated by falling trust in traditional institutions and increased time spent online amid Covid-19. In the kingdom of the blind, it looked for a while like the laser-eyed man was king. Now the techno-king appears to be making his move. Unless, that is, the no-less-influential regulators who are stepping up their scrutiny of crypto markets get there first.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Elon Musk’s Bitcoin Fun Continues

Oh Elon

I am sorry to keep talking about it because it is so stupid, but there really is something unprecedented and amazing and almost magical about Elon Musk’s continuing ability and inclination to move the prices of Bitcoin and Dogecoin with his slightest whim. Imagine if you had gone to Warren Buffett 30 years ago — or J.P. Morgan 120 years ago — and told him: Here is a lamp. In the lamp is a genie. When you rub the lamp, the genie will come out and invent two assets. They will trade like stocks in many ways, but unlike stocks they (1) will not be subject to U.S. securities laws, (2) will trade 24 hours a day, seven days a week, and (3) will not represent claims on any businesses or cash flows. One will have a market cap — a total circulating supply — of about a trillion dollars; the other will be smaller but still like $65 billion. They will be liquid enough, with lots of people trading many billions of dollars’ worth per day; you can buy or sell lots of them without too much price impact. And: Any time you want the price of either one to go up or down by 10% or more, you can just whisper “price go up” or “price go down” into the lamp, and it will happen instantly. You are the only person who can do this, and you can do it as often as you want.null

How much would Warren Buffett pay for that lamp? I suppose its value is not literally infinite: Once you have all the money you could ever spend, you might get bored of whispering to the lamp all the time and go do something else. 1  But it is as close to infinite as you’re likely to get, as close to a free-money perpetual motion machine as you’ll ever see in finance. You can quickly, easily, silently buy billions of dollars’ worth of a liquid unregulated financial asset and then tell it to go up, and it will go up. Then you can sell it, tell it to go down, and repeat. 

I will say again that I have no particular reason to think that Elon Musk is monetizing this magical ability that he has, and in fact I assume he’s not, but:

  1. He definitely has the power to move Bitcoin and Dogecoin prices whenever he feels like it.
  2. He definitely exercises that power with some frequency and with no apparent pattern.
  3. He definitely has the money to buy lots of Bitcoin and Dogecoin before making them go up.
  4. If he did do that, he probably would not have much in the way of disclosure obligations, at least not real-time disclosure obligations. 2
  5. Similarly he could easily sell them before making them go down, without much in the way of disclosure obligations.
  6. The regulation and policing of Bitcoin and Dogecoin trading are rather less comprehensive and aggressive than the regulation and policing of stock trading.

So if he was doing the magic-lamp trading strategy — which, again, I don’t think he is — it would look, to an outside observer, more or less exactly like what he’s currently doing. 

I just think that if you presented this possibility to any famous investor throughout history they would absolutely faint with excitement. And here Musk is, the second-richest person in the world, either doing it — in which case it’s one of the greatest trades, and also one of the greatest trolls, in history — or not doing it, rubbing the lamp and making Bitcoin and Dogecoin go up and down and up and down and up and down with his whims, just for fun, leaving billions of dollars of profit on the table because he doesn’t need the money and has the purest imaginable commitment to internet trolling.

Anyway:

Dogecoin soared on Friday after Elon Musk said he was working with the crypto’s developers to improve its efficiency as a means of payment.

The Tesla (TSLA) boss, who has previously said his Dogecoin tweets shouldn’t be taken seriously, tweeted that he was “working with doge devs to improve system transaction efficiency” and said the work was “potentially promising.”

The cryptocurrency, which was conceived as a joke in 2013, rose over 30% on Friday morning following Musk’s tweet. It was trading at $0.53, having reached as high as $0.56.

But also:

Elon Musk continued to whipsaw the price of Bitcoin, briefly sending it to the lowest since February after implying in a Twitter exchange Sunday that Tesla Inc. may sell or has sold its cryptocurrency holdings.

Bitcoin slid below $45,000 for the first time in almost three months after the billionaire owner of the electric-car maker seemed to agree with a Twitter post that said Tesla should divest what at one point was a $1.5 billion stake in the largest cryptocurrency. It traded at $45,270 as of 5:51 p.m. in New York, down about $4,000 from where it ended Friday. …

His latest dustup with Bitcoin started with a tweet from a person 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…”

The Tesla chief executive officer responded, “Indeed.”

But also, also:

Bitcoin steadied after Elon Musk said Tesla Inc. hasn’t sold from its holdings of the token, clarifying earlier comments that seemed to imply the electric vehicle maker may sell or has sold its stake.

The largest digital currency was at $44,900 as of 7:21 a.m. in London on Monday, after Musk in a tweet said: “To clarify speculation, Tesla has not sold any Bitcoin.” Earlier, the token slid to $42,185, the lowest since February. It’s about $20,000 off the record set in April.

Tesla definitely has sold some Bitcoin (in March), though, so you have to interpret that one a bit. Presumably he meant it hasn’t sold between the disclosed sales in March and the time he hit send on that tweet, but I can’t be sure about that.

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Comments (1)

  1. Gud for him

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