Bitcoin Dogecoin: Elon Musk Intentionally Sinks Cryptos is Staggering
Between regulatory vacuum and natural volatility of new digital gold: the weight of a single man, the whimsical and extremely wealthy boss of Tesla, and his tweets on the price of bitcoin and other cryptocurrencies, raises more and more questions.
“The fact that there aren’t more people to take offense that #Elon Musk intentionally sinks cryptos is staggering. Stop worshiping him!” One netizen said recently under the vindictive hashtag “Fuckmusk”.
This week, bitcoin has hit a low since January, sinking to $ 30,000 from almost double ten days earlier. The most popular cryptocurrency has since recovered, hitting around $ 40,000 on Friday.
Elon Musk is often the source of his good or bad fortune.
His company, Tesla, first raised the coin by announcing in early February that it had bought $ 1.5 billion worth of bitcoin and accepted cryptocurrency for payment for its electric cars.
But in mid-May, the rowdy leader backed down: he tweeted that Tesla would now refuse bitcoin payments because of the environmental risk caused by cryptocurrency mining.
He also regularly supports on the social network another virtual currency, the dogecoin, created as a joke and become very fashionable despite the doubts of financial circles.
“If it is difficult to prove that his tweets move the market, it looks like it anyway and it raises many questions,” said Todd Cipperman of the consulting firm Cipperman Compliancy Services.
“In the absence of regulation, the United States has become the Wild West in this area,” comments the expert in financial regulation.
For Kristin Boggiano, president of the digital asset investment consulting firm CrossTower, the influence of Elon Musk “plays more on small carriers than on institutional investors”.
And according to her, much of the volatility in cryptocurrency, “a natural feature of an emerging asset class,” has “mostly come from abroad.”
China’s admonitions were added to Tesla’s about-face. Several Chinese banking federations have indeed warned against speculation on cryptocurrencies, which, in their eyes, “are not real currencies”.
In 24 hours on Wednesday, some $ 8.5 billion in bitcoin was liquidated.
Thursday Elon Musk did it again by making the dogecoin jump with a cryptic tweet: “How much is the Doge in the window?”, He launched in reference to a popular song about a dog (“dog”).
“I lost everything because of you and now I live under a bridge (…). You can be proud,” replied a surfer on Twitter, applauded by nearly a thousand “likes”. Protestant micro-cryptocurrencies have even been created like the “$ FuckElon” to protest the influence of the boss of Tesla.
The policeman of the Stock Exchange, the SEC, has so far kicked in touch, content to qualify the cryptocurrency market “risky and dangerous”, recalls Mr. Cipperman who sees this caution “as a mistake”.
“The crypto market would benefit enormously from stronger regulation that would give investors confidence”, he said.
The tax authorities on the lookout
It remains to be seen who from the SEC or the CFTC, the agency that regulates derivatives, or even the tax authorities – represented by the IRS which begins to ask taxpayers to declare their bitcoin holdings -, will have the hand on regulation.
A bill has just asked the SEC and the CFTC to establish a working group with professionals in the sector to look into regulations.
The Central Bank (Fed) also split a statement Thursday to say that it “was exploring ways to clarify its role” in these new technologies.
The field of questions is wide to build safeguards against market manipulation or conflicts of interest.
Should we adopt strict rules of transparency as for the stock market? Should we focus on the security of digital asset portfolios, on erratic price movements?
For Aaron Klein, a FinTech expert at the Brookings Institute, “It is not for the government to regulate the amount of bitcoin nor is it its role to regulate the value of Amazon stock or that of gold. “.
“The purpose of regulation is to make the market transparent and honest and to protect investors”, adds the specialist who does not see “where the problem is if an individual says something about the market and makes it move”.
Others are more circumspect in the matter. “I think there is really a conflict of interest, when Elon supports dogecoin and he clearly has an interest” in pushing it up, says Kristin Boggiano.