How does Elon Musk affect crypto space?

How does Elon Musk affect crypto space?

Recently, Tesla CEO Elon Musk has been all over the news. He became the richest man on the planet but later lost that title alongside about $6.2 billion of his fortune. Four of his SpaceX Starship rocket tests failed, but a later launching and landing were a success. This same type of roller coaster behavior — which might be a part of Musk’s nature — has also been witnessed within the cryptocurrency space.

In February, Tesla allocated $1.5 billion of its balance sheet to Bitcoin (BTC). Bitcoin’s price jumped by almost $3,000 in minutes and then surged 20% in 24 hours. A month later, Tesla decided to accept Bitcoin for payments on its electric vehicles before Musk changed his mind.

There was also the whole Dogecoin (DOGE) story: After Musk helped to pump up the meme cryptocurrency, a performance with his mother on Saturday Night Live helped to tank it. The self-proclaimed “Dogefather” later denied any official involvement in the DOGE project.

This article from Empirex Capital won’t focus on the legal concerns of Musk’s behavior, something already covered by law professor and former SEC attorney Marc Powers in his latest opinion article, where he raised important questions:

“Does Musk have some undisclosed personal or business interest in knocking BTC and promoting DOGE? Are his tweets, which contain what some would consider wild speculation on the prices of Dogecoin and other cryptocurrencies, mere puffery and permitted First Amendment speech, or are they violations of securities, commodities, consumer or other laws?”

It will also leave aside all the price movements caused by Musk’s reckless tweeting and commenting to market analysts and experts. Instead, let’s focus on how all of this is affecting the crypto space in general.

The public’s awareness

Earlier this month, DOGE surpassed BTC in the global public interest. A survey later revealed that Americans are more familiar with the meme coin than they are with Etherum. This result might be upsetting to some, as the Ethereum ecosystem — which introduced smart contracts and became the fabric of the decentralized finance (DeFi) sector — surely deserves more recognition than a meme.

But look at this situation from another perspective: People who were not previously familiar with cryptocurrency, blockchain technology and DeFi are starting to google Dogecoin. It might interest them and they might go deeper into the topic, resulting in a rise of awareness, which might lead to mainstream audience involvement in the crypto space. As Nick Spanos, the founder of Bitcoin Center NYC and the Zap Protocol, rightfully noticed:

“DOGE is a powerful marketing tool, driving attention and adoption of crypto and decentralization as a concept. And in that respect, it is invaluable.”

The energy consumption problem

The reason Tesla suspended its support for vehicle purchases using BTC was the company’s concerns regarding the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal.” Sounds reasonable for a company that develops electric cars, right?

First of all, the question of whether BTC is a waste of energy isn’t new and has been debated by industry experts for some time already. Meanwhile, the mainstream media — The New York Times, Financial Times and Bloomberg, to name a few — went all out with headlines following Musk’s comments, blaming crypto for enormous energy use.

And what do you think of the influence of Elon Musk?

Created on 22nd Sep 2021