You’ve likely heard by now that Tesla has backtracked on its plans to accept bitcoin as payment for its electric cars. Supposedly, Tesla founder and CEO Elon Musk caught wind that bitcoin is bad for climate change. Personally, I find it hard to believe that he didn’t already know that.
At any rate, whether he did or didn’t, the bitcoin price has subsequently plummeted to below $50,000 (BTW, it’s back over $50,000 now). Did Musk cause that to happen?
Stephen Kelso, head of markets at ITI Capital said:
Bitcoin is a manifestation of the value of the internet and it stands to reason that social media and the cult of celebrity has, and will continue to have, an effect on driving demand and causing short term valuation crashes. Tesla is not the first nor will it be the last Big Tech superpower to introduce cryptocurrency payment plans. It will also not be the last to back track on such plans with a resulting short term impact on crypto markets, for better or for worse.
While some prognosticators, including Kelso, might consider the recent downturn in bitcoin’s price to be a “crash” caused by Musk’s new payment policy, I think a better way to see it is that Tesla’s acceptance of bitcoin as payment in March this year artificially propped up the price of bitcoin for a longer duration than might otherwise have occurred. The interesting thing about Tesla’s announcement is that the company is still vested in bitcoin with its $1.5 billion holdings, made just before announcing the company would accept BTC as payment. This signifies that Musk is still supportive of bitcoin’s mission while signifying that environmentalists have a point.
In other words, Tesla isn’t giving up on bitcoin.
The mini-crash that occurred this morning is the result of Tesla and Musk letting the air out of overinflated tires. Following the announcement, smaller fish in the bitcoin sea pulled out, causing bitcoin’s price to fall further. Many of them were likely new crypto investors. Some of them might have purchased BTC for the sole purpose of buying a Tesla at some point in the future. It will be sad to see them go, but they had to do. The price was too high for too long.
I’m not saying the price won’t ever return to $60,000. I believe it will. But I also believe it has further to fall. It may go back up again before it falls further, or it may not. But I do believe bitcoin is headed for a real crash some time in the next few months. After that, in due time, we’ll see it soar again well past its all-time high. What will be the catalyst for that event?
God only knows.
This post was first published at Publish0x. Follow me there.