Over the past few days, Bitcoin experienced a massive pump-and-dump-like price movement after Elon Musk changed his Twitter bio to one work only – Bitcoin.
In a two hour timeframe, the popular cryptocurrency grew 20% in value only to later drop back to its pre-Elon levels.
But what exactly happened? Why did the richest man in the world choose to do this, and what does this say about people are dabbling whether or not to purchase Bitcoin? In the next few chapters, we analyze the context that lead to this move, and what we can expect in the next few months.
Why did Elon change his Twitter status?
The past week has been quite eventful across all investment markets. In case you hadn’t heard, the stock market experienced an unprecedented event that exposed the corporate control across the whole stock market and the platforms that supposedly promote free-market stock trading principles.
A small Reddit group known as WallStreetBets (WSB) noticed that a particular stock (GameStop) was shorted massively by hedge funds, to a point where it exceeded the total stock’s value by 140%. The carefully structured shorting strategy is a common way for hedge funds to manipulate the stock market to their benefit.
After noticing this, the WSB community came together and collectively decided to purchase GameStop stock in large amounts to drive the price higher. This method, more commonly known as a short squeeze is exactly the opposite market manipulation strategy adopted by hedge funds.
Long story short, large hedge funds lost millions of dollars as they were forced to liquidate their short positions. The damage done was so large, the RobinHood, the exchange where the event took place, decided to pause all buy orders to “save” the large hedge funds, who were also the platform’s largest investors. But the platform didn’t stop there. In hopes of returning GME’s price to its pre-pump levels, users claim that the platform automatically sold their shares without their permission, leading to large losses.
Elon Musk was obviously upset with the shady tactics of RobinHood, taking it to Twitter to express his opinion.
u can’t sell houses u don’t own— Elon Musk (@elonmusk) January 28, 2021
u can’t sell cars u don’t own
u *can* sell stock u don’t own!?
this is bs – shorting is a scam
legal only for vestigial reasons
For many, including Musk, this blatant strike against retail users for the benefit of large corporates was the final drop in an overflowing glass. The system is rigged, and there is only one way out. While several large Bitcoin proponents had been trying to help Musk better understand how to convert part of Tesla’s treasure reserves into Bitcoin, he was rather quiet about his stance until that day. Once the elites showed their real faces, Elon changed his Twitter bio and accompanied his decision with the following tweet:
In retrospect, it was inevitable— Elon Musk (@elonmusk) January 29, 2021
Ripple effect across the market
The news of Elon Musk’s positioning did not only affect the price of Bitcoin. We also saw many popular tech investors and prominent investors following the same tactic. Reddit founder Alexis Ohanian and legendary investor Anthony Scaramucci changed their Twitter bio to #Bitcoin as well. It almost seems like a movement has started – and exchanges are noticing the heat.
The following day both Kraken and Coinbase had to temporarily halt Bitcoin purchases. Both brokerages ran out of Bitcoin to sell due to the large influx of new buyers. In a single day, Coinbase signed up more than 100.000 new users who were obviously affected by the happenings of the past week.
Those that have been sitting on the sidelines for a long time have finally received their buy signal. The market finally seems to collectively understand that most investment markets (and yes, that includes precious metals) are rigged against them. And the only way to escape this unfair treatment is to invest in something that no one can control. Something that no one can shut down. And the name of this investment opportunity is Bitcoin.
But don’t take our word for it. We are not here to give financial advice. We recommend doing your own research and trying to find out more about BTC and making an educated decision based on your best understanding.