Bitcoin’s black week: war with China and Elon Musk’s tweets

Bitcoin War Regulation

The main cryptocurrency lost 30% in a week and dragged the rest of the market. There are those who are optimistic and see a speedy recovery.

The cryptocurrencies, especially Bitcoin, had a very bad week with huge losses in their share prices. The last big blow was China, but they were already slapped by the tweets of billionaire Elon Musk.

Despite this debacle of the last week, there are those who are optimistic and see a speedy recovery. Do not forget that cryptocurrencies are very volatile assets and that this is not the first time this has happened.

Elon Musk’s tweets against Bitcoin

Between regulatory loopholes and the natural volatility of digital currencies, the influence of one man, Tesla founding mogul Elon Musk, and his tweets about the price of bitcoin and other cryptocurrencies raises more and more questions.

“The fact that more people aren’t getting obfuscated by #Elon Musk intentionally dropping crypto is horrifying. Stop worshiping him!” A netizen recently launched with the hashtag “Fuckmusk.”

Elon Musk is often the source of his good or bad fortune. His electric car company Tesla took the cryptocurrency to the skies by announcing in early February that it bought bitcoins for $ 1.5 billion and accepting this digital currency as payment for its vehicles.

But in mid-May, the restless businessman backed down: He announced in a tweet that Tesla would reject payments in bitcoins due to the environmental risk caused by mining the cryptocurrency, as the energy-consuming process for its generation is known .

Tesla & Bitcoin– Elon Musk (@elonmusk) 

Musk regularly supports another virtual currency, dogecoin, on the same social network, created as a joke and very fashionable despite the doubts in the financial world.

“Although it is difficult to verify that their tweets move the market, in any case it seems that, and raises many questions,” said Todd Cipperman, from the consultancy Cipperman Compliance Services.

The price of Bitcoin

This week, bitcoin hit a bottom since January by falling to about $30,000 when it was worth nearly double ten days earlier. The most popular of the cryptocurrencies has since recovered, to settle around $36,000 on Friday, but this Sunday it fell again.

“In the absence of regulation, the United States became the ‘Far West’ on the matter,” said Cipperman, an expert on financial regulation.

For Kristin Boggiano, president of the digital asset investment advisory firm CrossTower, Elon Musk’s influence “is especially noticeable in small investors more than institutional investors.”

According to her, much of the volatility of the cryptocurrency, “a natural characteristic of an emerging asset class … came mostly from abroad.”

China against cryptocurrencies

Reactions in China were added to the twists and turns of Tesla . Several Chinese banking federations warn of speculation in cryptocurrencies that, in their opinion, “are not true currencies.”

In 24 hours on Wednesday, some $ 8.5 billion worth of bitcoins were settled.

On Thursday Elon Musk returned to the fray and raised the dogecoin with a tweet: “How much is the Doge worth in the showcase?” 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,” a netizen replied on Twitter, applauded by a thousand likes. Some “contestatory” cryptocurrencies were created like the “$FuckElon”, to protest against the influence of the founder of Tesla.

Regulations on cryptocurrencies

The securities authorities of the US SEC are content so far to describe the cryptocurrency market as “risky and dangerous”, recalled Cipperman, who considers this prudence “as a mistake”.

“The cryptocurrency market would greatly benefit from greater regulation that would give confidence” to investors, he emphasized.

In the United States, it remains to be known which entity will have responsibility for regulation, whether it will be the SEC or the CFTC, the agency that regulates derivative products, or even the IRS, the tax agency that is already beginning to ask taxpayers to declare their assets. in bitcoins.

A proposed law calls on the SEC and CFTC to establish a task force to develop a rulemaking.

The Federal Reserve also said in a statement Thursday that it “explores ways to pin down its role” in these new technologies.

The questions are numerous.

Is it necessary to adopt strict rules of transparency as for the stock market? Should they focus on the security of digital asset portfolios, on erratic movements in prices?

For Aaron Klein, an expert in financial technologies at the Brookings Institute, “it is not the government’s job to regulate the value of bitcoin, just as it is not its role to regulate the value of Amazon shares or gold.”

“The objective of a regulation is to make the market transparent and honest, and to protect investors,” added this specialist who does not see “where the problem is if an individual says something about the market and makes it vary.”

Others see things differently. “I think there is really a conflict of interest when Elon (Musk) supports dogecoin and clearly has an interest” in bringing it up, Kristin Boggiano said.