Elon Musk’s tweet on crypto and how to deal with them
It’s becoming unbearable. He tweets and bitcoin surges, he backs something up, and it increases 600%, he so much as mentions a ridiculous joke like token, and it becomes one of the highest growth cryptocurrencies in the world. Setting aside the legality of his actions and the fact that he is constantly monitoring Elon’s Twitter feed for investor tips, his actions are becoming annoying, to say the least. This story is about how Elon Musk and the likes of him have too much power in cryptocurrencies.
The Ripple Effect
The reason behind the rise of crypto after Elon Musk’s tweet is not that people view him as a god or a person with great investment decisions. I’m not even talking about his failure in his businesses and how close he came to declaring bankruptcy in 2008. I’m talking about when he talks about a cryptocurrency, not even backing it or advocating for it. That one will go up. This is called the ripple effect. History has shown that when Elon talks about something, it will go up. Now, people will immediately buy that because they want to make a quick profit. So with crypto being decentralized, a mass of demand against normal supply would result in an instant increase of the price, specifically since crypto doesn’t have a cap on its increase.
What about the decrease?
So we know about the ripple effect being the cause of the increase. How about when his tweets cause a crash. How can that be explained?
Well, the ripple effect works in reverse as well, when a mass of people and potential investors, hoping for a profit, expect a fall after Elon’s tweet will start to sell their holdings, the network will see an increase of supply against the demand. And the price goes down.
How to deal with the Twitter mobs?
There is some outrage going on about this right now. Some people say that people like Elon musk should take responsibility and stop tweeting, while others encourage it. Some countries like China have banned advocacy for cryptocurrencies as well as their trading. There is always the solution of “If you can beat them, join them,” but joining a Twitter mob would not be smart. Anonymous, the international hacker group, issued a lengthy statement towards Elon Musk regarding his influence and careless tweets and their effect on people losing their money. Musk has not tweeted ever since.
Benefits of Elon for crypto
While having all of these problems, there is the obvious benefit of crypto advocacy. People like Elon Musk, who has many followers, and we don’t mean this in a Twitter kind of way; this is followers in life, who are better described as minions or believers, have put crypto on the map for many people. To this day, there are a lot of uninformed people still thinking crypto is a scam or pyramid scheme, but when people like Elon musk tweet about them and approve that they have it as well, and they are investing in it, those kinds of doubts will go away for a lot of them. This would result in more people joining this decentralized revolution.
All in all, having advocates in the power of cryptocurrencies and blockchain technology, as well as their safety and risks, are generally a good idea since it will encourage more people to enter this market, but if those individuals gain popularity, they shouldn’t really advocate for what they hold, What they think about a specific cryptocurrency, that’s borderline illegal and will hurt a lot of people as cryptocurrencies are completely driven by market supply and demand.
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