Yerevan (CoinChapter.com) — Bitcoin sits near $43,000 at the time of this writing. That last time it stooped anywhere near the said low was on February 28. Since then, the flagship cryptocurrency had been enjoying a smooth ride to the upside, almost reaching a record high of $65,000 before turning lower in the wake of altcoin mania led by Dogecoin, Litecoin, XRP, and other tokens.
CoinChapter’s previous coverages discussed a bullish setup based on solid market fundamentals and a pinch of technicals. It was a natural reaction to expect from an asset that showed an extreme bullish response to an ongoing expansionary experiment done at the behest of the Federal Reserve, leading to a higher than anticipated inflation jump in April.
But the coverages ignored the elephant in the room: Elon Musk. The billionaire investor was one of the biggest crypto influencers earlier this year when his electric vehicle company Tesla’s securities filing revealed that it holds $1.5 billion worth of Bitcoin. Later, the firm announced that it would accept the cryptocurrency as payments for its products.
On May 12, Mr. Musk & Co. put a damper in the Bitcoin bullish setup by announcing that it will no longer accept Bitcoin as payments, citing environmental concerns. The announcement left a wave of disbelief among the cryptocurrency enthusiasts. The primary question was: Did Elon Musk not know about Bitcoin’s carbon footprints beforehand? Why did he take the decision so quickly?
Anthony Pompliano, an early-stage investor known for his pro-Bitcoin stance, discussed market manipulation theories in his newsletter to clients. He cited Glassnode data to show how cryptocurrency exchanges received a massive inflow of 19,259 BTC right before Mr. Musk’s tweet.
“I do not think this is coincidence and was likely someone with insider information,” Mr. Pompliano claimed.
He added that Bitcoin also flew heavily out over-the-counter wallets, showing that Mr. Musk’s tweet even shook the strongest hands — the institutions — in one of the year’s largest exchange outflows.
Another Bitcoin Dump Underway
Mr. Musk’s Twitter account kept assaulting the Bitcoin market over the weekend after responding to an alleged crypto scammer that he would or has already unloaded his entire Bitcoin holdings.
Bitcoin bulls succumbed to another Musk shock. The prices fell below a trustworthy support level of $47,200 during the weekend. And on Monday, they established an intraday low of $43,000 during the Asia-Pacific session, promising more downside shocks during the European and the US trading hours.
To some, the massive dip was an opportunity. Analyst Cheds was quick to tweet that he bought some Bitcoin at its sessional low. Others also practiced the same strategy, reiterating that the cryptocurrency remained in a bull market and Mr. Musk cannot hurt the macroeconomically-backed upside bias.
But despite support from hardcore supporters, Bitcoin has accidentally fallen in the middle of a drama that it never needed. Mr. Musk might keep posting about Bitcoin while shifting focus on the cryptocurrency’s rival, Dogecoin. One cannot rule out the possibility that the Bitcoin price could crash to $40,000 or lower. Long-term investors do not prefer to keep their capital into assets surrounded by “emotional billionaires.”
Tesla’s shares were rising after Mr. Musk’s Wednesday tweet. The Barron’s reported a bullish outlook for the stock this week.
Core Bitcoin traders would remain focused on fundamentals.
This week, on Wednesday, the Federal Reserve will release the minutes of its last month’s meeting, with sharper focus from economists on debates over tapering. The US central bank stated that it would take some time before cutting down its bond-purchasing program and benchmark lending rates. Nonetheless, UBS suggests that few more Fed officials want to start discussing tapering moving forward.
The FOMC minutes also expect to show that the pandemic’s influence on the US economy has reduced sharply due to fast vaccinations and reopening. That could accelerate the Bitcoin sell-off in the near term. No US inflation data is on the calendar this week.
Yashu Gola is a Mumbai-based finance journalist. He is profoundly active in the bitcoin space since 2014 – and has contributed to several cryptocurrency media outlets, including CoinChapter, NewsBTC, FxDailyReport, Bitcoinist, and CCN.
Academically, Yashu holds a bachelor's in information technology, with majors in data structures and C++ programming language. He has also won the 'Atulya Award' for his efforts towards raising $100,000 for an India-based farming project.