The ‘Elon Musk Effect’: Traders' Greatest Fear
What do you think a trader is most afraid of? Lose? Stay without the funds in the account? Wind up a loser? No, you guessed wrong. It turned out that the greatest fear of crypto lovers was ... Elon Musk's tweets.
This month, Morning Brew asked Twitter users about professional fears. The answer was to consist of four words. More than 30,000 people responded to the request of the hottest business newsletter. A representative of the crypto world shared his worst nightmare as well. "Elon Musk just tweeted," wrote Devin Marty, Strategic Development Manager at Wise Token.
The author of "The Decision-Making Employee" hinted at the head of an American electric vehicle company manipulating the virtual asset market. Fair enough. You can do something about the fear of losing money or opening a new trade after five loss-making ones (learn how to manage such trades in our article). But there is nothing you could do about Musk's tweets.
We remind you that the business magnate wrote on his social media that Tesla was going to suspend the option to pay for vehicles with BTC in May. Mining that comes from ‘dirty energy was to blame (find out what the Bitcoin Mining Council would say about that here). Such a statement was enough for the price of a coin with a stellar reputation on Binance to collapse by 17%, to an 11-week low of $46,000, and the market capitalization fell below $1 trillion.
According to the Investing.com survey, every fifth participant who sold digital gold in May 2021 was guided by Musk's criticism of the cryptocurrency. Investors also called his tweets about bitcoin "annoying", "unfair" and "entertaining".
Some users went further. Outraged crypto fans created a new token - Fuck Elon Tweet (FUCKELON) to convey contempt for the posts of Tesla CEO, who affected the digital asset market. For the fact that the billionaire makes crypto prices as shocked as the crowd, anonymous hackers posted a video in which they declared war on him.
It is worth noting that the American entrepreneur was also tough on the stock market. One of the richest people in the world called Tesla Inc.’s shares “dramatically” overvalued so they fell by 10%; he sent Panasonic shares soaring working with Samsung; Tesla shares dropped after his joke about bankruptcy, etc.
Elon Musk is a phenomenon. Some think he is a genius, others - a charlatan. How to react to his posts on social media? Should an ordinary investor/trader listen to him? It is hard to provide a simple yes or no answer.
According to AMarkets, a leading forex and CFD broker, the trend when one person holds over the market will fade away. Over time, Elon Musk's tweets will no longer be essential. People will begin to focus on the actions of regulators, institutional investors, and other industry professionals to find out the further dynamics of assets.
Leading Strategist at the Exante investment company Yanis Kivkulis believes that the businessman is Mr. "l-run-this-game" Musk. In his opinion, a strategy built on the basis of his or other billionaires’ statements can be effective, but extremely risky.