Some view Elon Musk as crypto’s public enemy no. 1. The billionaire CEO made a big splash when he announced that Tesla would no longer accept Bitcoin as a payment method for its vehicles.
Tesla’s reasons are understandable. The company shares a concern for the environment, and it believes that Bitcoin isn’t exactly the most eco-friendly payment option out there. So, while they continue to invest in Bitcoin, they still don’t believe that it can scale as a payment method without significant effects on the environment.
While Tesla’s reason for not accepting BItcoin is rational, investors were still unhappy with how the announcement was made. It definitely didn’t help that Musk’s announcement immediately set off the market downturn. Tesla might not have been the only cause of the downturn, but it doesn't matter. The market needed someone or something to blame for this drag, and Tesla was the only choice that people could find.
Not a Bad Place to Be
Understandably, people will want to blame Musk and Tesla for the market’s current position. Like we said, the company’s announcement was what started all this trouble. However, there’s also a benefit to the madness.
When cryptocurrencies crashed in 2017, the condition presented an opportunity for people to learn more about digital assets and what makes them tick. It also presented an opportunity to shake off the panicking investors and for the long-term crypto believers to hold their wealth. Many of these long-term believers are now enjoying the benefits of their beliefs.
Note that 2017’s market crash was much worse than this. Bitcoin plunged from its all-time high of $19,700 and bottomed out at around $3,000. That’s about an 80 percent drop.
In contrast, Bitcoin fell from $64,000 to about $28,000, making a drop of just over 56 percent. There is little to no doubt that Bitcoin will eventually regain its highs at some point. When it does, the asset will be much better and with investors who believe in its value.
Time to Move On From Musk
Another benefit is what many believe to be the end of Musk and his influence over crypto. The billionaire has spent a significant amount of time on social media talking about how much he believes in cryptocurrencies. Whenever Musk tweeted, it was like BItcoin’s value would fly almost immediately. The same thing happened with Dogecoin.
It was definitely fun while it lasted. However, many had cautioned about Musk’s tweets and how they could be manipulating the market. The Securities and Exchange Commission (SEC) even reportedly investigated Musk over his many tweets about cryptocurrencies.
Musk has had a history of being quite outlandish on Twitter. He once tweeted that he’d sell all of his possessions, following that with an acknowledgment that Tesla’s stock was “too high.” That last one sent Tesla shares tumbling. Through all of this, the crypto market was behind Musk as he seemed to remain a crypto fan.
Now that the billionaire seems to have messed up with his tweets, everyone should see that there is no reason to idolize people. Influencers and famous people can tweet support about cryptocurrencies all they want, but the only reason why you should invest is that you believe in an asset’s long-term potential.
Of course, there is always the chance that people will continue supporting Musk and going on rampages when the billionaire tweets a Dogecoin-themed meme or something else. None of this is right, but that is the world we live in.
Market Downturn Could Affect Tesla Too
It is also worth noting that Tesla could be affected significantly by the current downturn. Earlier this year, reports confirmed that the automobile company made more money through Bitcoin than selling actual cars. In fact, the only reason why Tesla had such a record year was that the company benefited from the rise of Bitcoin we saw earlier in the year.
With Bitcoin trading down, there are some reports that Tesla will see a much worse quarter than expected. It is even worse since the company has been struggling to sell cars in big markets like China. The market will be watching closely to see how Tesla will manage to stay profitable in the year’s second quarter, especially with such market conditions affecting it.
There are even rumors that Tesla might have to sell off its Bitcoin holdings. If this happens, Musk's credibility in the crypto space will drop even further, thus affecting his influence over investors and more.
The entire ordeal could just be what everyone needs to get out from under the nose of Elon Musk and Tesla.