Is Elon Musk Manipulating Bitcoin and Dogecoin Market? Researchers Weigh In

Bitcoin, Is Elon Musk Manipulating Bitcoin and Dogecoin Market? Researchers Weigh In
Image by Darwin Laganzon from Pixabay

Yerevan (CoinChapter.com) – Elon Musk, the chief executive of Tesla and Space-X, made headlines for his controversial actions relating to Bitcoin and Dogecoin. Some researchers and experts doubt his moves as market manipulation.

All hell broke loose on social media platforms and the crypto market since May 13, when the billionaire entrepreneur announced his company Tesla is making a U-turn on Bitcoin payments. He cited Bitcoin mining’s carbon footprints as its primary reason, raising eyebrows that why Musk invested in the cryptocurrency in the first place since he knew such environmental issues beforehand.

Read more: Tesla Ends Romance With Bitcoin

This move initiated an avalanche in Bitcoin price. The token crossed all foreseeable margins, dropping to $42,100 on Monday, only to pick up to $45,139 in the early European session Tuesday.

Bitcoin price made attempt to recover. Source: BTCUSD on TradingView.com
Bitcoin price made attempt to recover. Source: BTCUSD on TradingView.com

Smaller coins followed suit and ‘went down with the ship’, including Mr. Musk’s pet crypto Dogecoin, which he actively promoted on Twitter. His attempts to rocket the Doge price we futile, however. The token was still consolidating around the $1.45 margin, barely making it above its 20-day Exponential Moving Average (blue wave on the chart).

Dogecoin consolidating around the $1.45 margin. Source: DOGEUSD on TradingView.com
Dogecoin consolidating around the $1.45 margin. Source: DOGEUSD on TradingView.com

The Root Of The Problem

Some experts believe that the CEO had alternative motives in mind. Paulo Santos, a Portuguese independent trader, analyst, and algorithmic trading expert believes Mr. Musk’s actions would “[…] reveal yet another hype angle for Tesla”. The analyst stated that “the involvement with Bitcoin and Dogecoin has created some strange mysteries,” which he attempted to explore.

In retrospect, Tesla is still holding $1.5 billion in the alpha cryptocurrency. Although the company’s CEO threatened to dump the holdings, he did not yet pull the trigger.

Read more: CC Opinions Ep01: Tesla’s Depreciating Net Income is Very Dangerous for Bitcoin

Mr. Santos’s first cause for concern is the billionaire’s true interests. He believes Mr. Musk’s actions to tank the Bitcoin price can be traced back to Tesla’s impairment policy. Essentially, if Bitcoin trades down below Tesla’s cost basis (original value of an asset for tax purposes), Tesla will recognize an impairment on the token’s position.

The expert further deemed the CEO’s environmental concerns to be “a red herring.” In his view, the sustainability of bitcoin mining, however noble, is a lost cause in the current economic circumstances. Moreover, he emphasized that Mr. Musk knew about the ecological repercussions all along, which begs the question, why turn back now?

Why Dogecoin?

Mr. Santos also closely examined Dogecoin, and why it became the focal crypto for the billionaire. He pointed out the differences and similarities in Bitcoin and Dogecoin blockchains, citing the recent tweet from Mr. Musk, where he hinted at working on upcoming improvements.

The veteran investor added that Tesla might want to make money out of thin air by exploiting crypto markets’ volatility. Earlier, a CC Opinion piece also noted that Mr. Musk might use his crypto profits to offset lower Tesla earnings.

Read more: Dogecoin Among Victims of the Elon Musk-led Bitcoin Crash

Anthony Pompliano, an entrepreneur and an outspoken Bitcoin supporter, voiced his opinion on that very same tweet:

[…]this type of proposal immediately triggered numerous red flags. […]His suggestion that there were any technical issues with the crypto asset is an immediate sign that he didn’t realize that most blocks weren’t even close to being full of transactions. It also could have been the common, yet inaccurate, suggestion from newcomers that the block size (how many transactions can be processed in a single block on a blockchain) should be improved.

The ‘Pomp’ said.

In an interview with CNBC on May 13, the Pomp also hinted that Elon Musk is not the person to make clueless decisions and that he anticipated further actions from the billionaire, that would shed light on his true intentions.

The Tesla CEO seemed to have a personal interest in making Dogecoin the “currency of Earth.” However, the joke is getting increasingly humorless, as the crypto market is counting its losses. Whether Mr. Santos’s predictions on Tesla gains pan out is not yet clear. Crypto investors worldwide are still anticipating answers as the story continues to unfold.

Read more: Bitcoin Week Ahead Ep04: Elon Musk Market Manipulation Clouds FOMC Setup

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