Cryptocurrency crash: Elon Musk’s tweet about dogecoin
Categories: Crypto News US
With the cryptocurrency bloodbath leaving panicked investors scrambling as bitcoin and other cryptos plunged and almost $US1 trillion ($A1.4 trillion) worth of value was wiped off the market in a month, it seems even billionaire Elon Muck can’t save the embattled sector.In January, the cryptocurrency dogecoin soared in value by 15 per cent after the world’s richest man said it could be used to buy Tesla merchandise in a tweet. The digital coin, which started as a joke complete with a shiba inu dog meme, rose to $US0.20 with its overall value skyrocketing 5859 per cent over the past 12 months, according to the Coinbase website.Dogecoin also spiked dramatically after the world’s richest man struck a deal to buy Twitter for $US44 billion ($A61.4 billion) in April.Dogecoin traders are fully expecting Musk to allow it to be traded on Twitter and the price spiked accordingly, trading for $US0.160040, up by an eye-watering 21.8 per cent. But on Friday, the SpaceX founder’s tweet declaring dogecoin has “potential as a currency” failed to excite the market, unlike previous times.The phenomenon of the tech tycoon’s tweets buoying the market has been called the “Musk effect” by some.In May 2021, a tweet by Musk was credited for a rise of more than 29 per cent in one particular cryptocurrency.Yet cryptocurrency is taking a battering with fears it will ripple out into the broader financial market. Bitcoin was trading around $US28,300 ($A41,200) on Thursday afternoon, down 20 per cent over the past week and nearly 60 per cent lower than its all-time high of $US69,000 ($A100,000) in November 2021.Australian crypto trading platform YourPortfolio managing director Daniel Sekers said the increased selling pressure shows that crypto markets are similar to investment markets, which are subject to pressures based on macroeconomic and geopolitical conditions. But chief economist at trading firm ACY Securities Clifford Bennett said while the crypto market presents better odds than a casino, it was still risky business.“To trade crypto in modest amounts is extremely entertaining while being fraught with danger from the huge volatility,” he said.“Many people have become rich in the crypto mania and far more have lost their shirts. This is the very nature of any tulip bulb type market boom and bust. “In such markets, there are the added dangers of initial success leading to ever heavier betting by participants, I mean investing, until the inevitable turnaround catches them at their most heavily leveraged point. It doesn’t take long for them to lose everything.”There is a very real and distinct probability that the collapse of crypto markets is only the first link to shatter in financial markets, he said.“That the repercussions with a market so widely participated in and of such significant size, are unavoidable in both sentiment and very real bottom line losses across the next and the next and the next asset class,” he said.“Think just the start of the GFC, but a much bigger event, and you will begin to grasp how great the risk truly is at the moment.”