Even if you know only the basics about Bitcoin, you’ve probably heard the word “decentralized.” It means that the digital currency is not tied to one central authority, so it’s not subject to a single possible failure. But if you’ve followed headlines about Bitcoin, you know that the currency’s success can hinge on one man tweeting breakup memes.
Last week, the Wall Street Journal reported that the Securities and Exchange Commission has told Tesla that it has failed to keep its CEO’s tweets in check, as required by a 2018 securities fraud settlement. Elon Musk is supposed to run tweets that could affect stock prices or the market through Tesla’s communications team, but that’s not working out too well.
Soon after the Journal story published, Musk copied and pasted a breakup meme, added the hashtag #Bitcoin and a Bitcoin emoji followed by a broken heart emoji. The move sent the value of the cryptocurrency tumbling and took digital currencies ether and dogecoin down with it.
Cryptocurrency traders love memes, but it’s been live by the sword, die by the sword for them, particularly when it comes to Musk. When Musk hosted Saturday Night Live a month ago, he joked about dogecoin—a meme-inspired cryptocurrency he has regularly hyped—being “a hustle” and the value plunged nearly 30%. A week later, he gave the virtual currency a boost by tweeting that he was working with developers to improve its transaction efficiency.
In January, Musk added #bitcoin to his Twitter bio, which was enough to boost the cryptocurrency by 20% (it has since been removed). A few days later, Tesla bought $1.5 billion in bitcoin and said it would accept the currency as payment for vehicles, sending the price to a record high. Three months later, Musk tweeted that Tesla would no longer accept Bitcoin, citing the environmental effects of cryptomining, causing its value to drop 10%.
These ups and downs raised the ire of hacktivist group Anonymous, which released a video accusing Musk of trolling cryptocurrency markets.
Setting aside all else that can be said of the hagiography around Musk and the influence that goes with it, the impact of his words (and sometimes emoji) on cryptocurrency has served to expose one of its weaknesses. Those who wield enough power in the market can manipulate it.
Self-styled “crypto analyst” Mr. Whale on Twitter replied to Musk’s breakup meme tweet with: “Bitcoiners arguing that its [sic] literally impossible to manipulate the price of Bitcoin….while simultaneously crying that Elon Musk is manipulating the price of #Bitcoin is peak hypocrisy.” Musk himself responded with an emoji of a finger pointing to the tweet.
This is not a shocking economic reality when it comes to other markets, but for a form of currency that is touted as being the answer to those who wish to divest themselves of government control of currency, it’s devastating. The complexities of buying and using cryptocurrency put it beyond the grasp of the average consumer. Bitcoin and its brethren reside primarily in the digital wallets of the technocracy. When those who hold the currencies bend to the whims of Musk, it makes him a leader and cryptocurrency a sort of fiat.
Cryptocurrency investors may resent Musk’s manipulations, but the market is a volatile one and the majority of those who are involved in it expect big swings. They know that Musk will likely not affect their money long-term. But his antics have added value to the arguments of those who say cryptocurrency’s claims are counterfeit.
