The cryptocurrency market hasn’t been the same since Tesla bought Bitcoin
Elon Musk has once again affected the Bitcoin price with a Tweet, but bucked the recent negative trend by giving the original cryptocurrency a daily gain of more than ten per cent. On 13 June, the Tesla CEO tweeted that the firm will resume BTC payments for its vehicles when Bitcoin mining is demonstrably dominated by renewable energy. The Bitcoin price is now around $40,000, up by more than 10% over the last week.
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Elon Musk Twitter: How does it affect the Bitcoin price?
It seems like aeons ago that Musk first signalled his involvement in the crypto space with the now-infamous Tweet, “In retrospect, it was inevitable”. The post referred to the inclusion of #bitcoin in the EV magnate’s Twitter bio, and was the first clue that an Elon Musk bitcoin investment might be on the cards. It later transpired that Tesla bought bitcoin worth $1.5 billion.
When Tesla bought bitcoin, a rally ensued that led to a series of new all-time highs, the most recent being just a whisker off $65,000 in mid-April. In true poetic fashion, however, it was another Elon Musk Bitcoin announcement that led to the end of this bullish run. In May, he announced that Tesla would no longer accept BTC payments for its vehicles, citing the use of fossil fuels in mining the coin, which arguably makes Bitcoin bad for the environment.
This led to a market crash that halved the value of the cryptocurrency, and several other Tweets had a significant effect on the price of Bitcoin after that. The latest Elon Musk Bitcoin tweet, however, is more positive, and could lead to another huge bull run like that seen in January and February of this year.
A chart showing “the Musk effect”. Source: Vox
How much Bitcoin does Elon Musk own?
Did Elon Musk sell his Bitcoin? The answer is yes — but only partially. The initial Elon Musk bitcoin purchase for the Tesla treasury was valued at $1.5 billion. Tesla sold bitcoin constituting around 10% of its total holdings in Q1 2021, earning the manufacturer $101 million in profits. Tesla still holds around 38,300 BTC, according to Fortune. The fact that Tesla did not sell any bitcoin during the May crash is a testament to Musk’s belief in the coin, and that its value will eventually soar again.
This is inaccurate. Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market.
When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.
— Elon Musk (@elonmusk) June 13, 2021
Tesla Bitcoin payments to resume: will the market rally?
The SpaceX founder’s most recent Tweet led the Bitcoin price to rise as it signalled a change in sentiment. Musk declared that Tesla will start to accept Bitcoin payments for vehicles again, after suspending this option in May due to environmental concerns.
According to Musk, Bitcoin mining is potentially harmful to the environment. The electric vehicle tycoon has stated that he is concerned about the amount of coal-derived energy used in mining, the process that distributes new bitcoins and secures the network. However, Musk says that once mining is sufficiently eco-friendly, Tesla Bitcoin payments will once again be possible.
This may happen soon, as Bloomberg reports that the Bitcoin Mining Council (BMC) launched its website this week. The BMC aims to improve transparency around mining, and this is said to be aimed at increasing renewable energy use in Bitcoin mining operations. If Tesla starts accepting payments again as a result, the market could see a huge rally, judging by the positive effects of past Musk tweets.