Why did Elon Musk’s tweets cause a chain reaction in Bitcoin prices?

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What does Elon Musk do for fun when he’s not constructing rockets, hyperloop networks, or operating an electric vehicle company, Tesla? The bulk of the crypto community would describe crypto currencies and their price movements as ‘pump and dump’ or ‘fooling around.’ This has been the situation in recent months.

Musk’s tweets, which have more than 55 million followers on Twitter, have a tremendous influence on the crypto market. What about the ecosystem’s guiding idea, decentralization? This, of course, contradicts the fundamental tenet of a decentralized industry.

Consider Bitcoin‘s price movements before and after Musk’s engagement, which has seen a 40 percent fall since its recent all-time high. DOGE, on the other hand, was influenced, but primarily to its advantage.

 

Martin Green, CIO of quant investment firm Cambrian Asset Management, is the latest crypto enthusiast to address the Musk factor with respect to crypto markets. He said:

“Often the news itself, like Elon’s tweet, would have a different consequence in a different situation, you can light a match in the middle of my driveway… you can take that match and drop it on the floor in an open space. The monstrous difference in the consequences. Still the same match.”

According to him, it was not Musk’s Tweet that mattered as much, but the environment.

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He further addressed the issue of lack of institutional spot buying and Leverage building in the system, which aggravated the bearish indicators. He added:

“The flattening out of the marginal difference between spot buyers and spot sellers had become a lot more even-handed. Not like there was a huge accumulation of demand of spot that’s rising etc etc”

With regard to the drop Bitcoin witnessed, he stated:

“Any move down created a cascading of selling pressure. At the time, there was not that much leverage, there was building institutional spot volume.”

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