Will Telsa and Bitcoin still find each other? A tweet from Elon Musk suggests reunification and gets the crypto market going again.
The crypto market is gradually moving back into the fast lane. The total market capitalization posted a plus of nine percent on a daily basis and thus rose to 1.69 trillion US dollars. With a respectable price increase of 12 percent, Bitcoin also shakes the dust off the shoulders and pulls the weekly balance up by ten percent. At press time, the BTC price is trading at $ 39,700.
In the slipstream of the crypto reserve currency, it is also driving the altcoins north. Ethereum (ETH), Binance Coin (BNB) and Polkadot each recorded an increase of almost eight percent, Cardano (ADA) and XRP share an increase of around seven percent. The bottom of the ten largest cryptocurrencies, Uniswap (UNI), even served up a price increase of twelve percent.
After a rather difficult month of trading, investor sentiment in the crypto market seems to be slowly recovering. The Fear and Greed Index is still on “fear” at 41 points, but has gained a whopping 26 points since last week.
Musk says yes and no to Bitcoin
The chapter “Musk and Bitcoin” actually seemed to have ended after the Tesla boss distanced himself from the cryptocurrency on Twitter and the company discontinued the BTC purchase function. The back and forth has left a field of havoc on the crypto market and has scratched Musk’s reputation, at least in Hodler circles. If he was touted as the Bitcoin messiah shortly before, he fell out of favor just as quickly.
The chronology has also raised questions about possible market manipulation. After all, Musk’s timing couldn’t have been better from a Tesla perspective. After the company announced the $ 1.5 billion Bitcoin purchase, the price rose to a record high. Tesla finally parted with ten percent of its holdings in a very profitable way and then dropped Bitcoin like a hot potato.
It is precisely this pump-and-dump pattern that Magda Wierzycka, CEO of the fintech company Sygnia, accused the Tesla boss of in a Cointelegraph article. Musk took it as an opportunity to present his point of view.
In response to the allegation that Bitcoin was “price manipulated by a very powerful and influential person”, Musk replied:
This is imprecise. Tesla only sold ~ 10 percent of its inventory to confirm that BTC can be easily liquidated without moving the market.
If there is confirmation of a reasonable (~ 50 percent) clean energy use by miners with a positive future trend, Tesla will again allow Bitcoin transactions.
The content of the first part of the sentence can be disputed, as it in no way invalidates the argument of market manipulation. However, attention attracted the second sentence, in which Musk holds out the prospect of a conciliatory end, assuming the mining balance shows 50 percent use of renewable energies.
This is inaccurate. Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market.
When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.
— Elon Musk (@elonmusk) June 13, 2021
Musk leaves all options open
Ironically, what happened, what critics like Wierzycka chalk at the Twitter presence of Musk: The tweet triggered a price jump of almost 4,000 US dollars in the following hours. Elon Musk did it again and put the market in a state of excitement. This time, too, the tweet should have been calculated. After all, as the Tesla boss himself states, his company continues to hold a large BTC inventory.
With the stipulation of 50 percent use of renewable energies, he has also cleverly left a back door open, which allows him to re-enter Bitcoin at almost any point in time. Because the energy balance of the entire mining is not recorded at all and is only based on rough statistical models. A 2020 report from the Cambridge Center for Alternative Finance estimates the share of “clean” energies in mining at 39 percent. An evaluation by asset manager Coinshares two years earlier came to a result of 77 percent. He left it open which data basis Musk relies on in his decision.
Taproot is coming in November
In a first voting procedure at the beginning of the month, the update “Taproot” did not find a majority in the Bitcoin community. During the most recent adjustment of the mining difficulty, the miners in the “speedy trial process” have now voted with over 90 percent for the soft fork, which will reach the Bitcoin blockchain in November.
Three updates that build on each other are bundled under Taproot: BIP 340, 341 and 342. The most important of them is the implementation of Schnorr signatures, which increases the anonymity of Bitcoin transactions. Find out here why the update is also beneficial for scaling the network .