Is Elon Musk Manipulating The Cryptocurrency Market?
The Tesla Snowball Keeps On Rolling
Since Elon Musk’s tweet “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions […] cryptocurrency is a good idea on many levels and we believe it has a promising future but this cannot come at great cost to the environment”, Bitcoin has been spiraling down. The rest of the crypto market followed the leader, as it usually does.
At the time of writing, Bitcoin is changing hands at $39,700, down more than 21% in the last seven days. Ethereum is trading at $2,600, after a sharp drop from above $4,000 (-32% in the last seven days). Binance’s BNB is valued at $375, a huge drop considering that just 10 days ago it was priced in the $700 area.
Despite all the red on the charts, it’s worth noting that most cryptocurrencies are showing bounces at or near support. This could be the proverbial “dead cat bounce”, which is known as a situation where an asset is experiencing a short burst of bullish pressure and movement, or it could be an actual recovery.
Ethereum co-founder Vitalik Buterin expressed his opinion in a CNN interview, saying that the crypto markets will learn their lesson from this market crash and will “build up an immune system over time”. He also mentioned that he doesn’t think that Musk’s tweets stem from ill will, just “that ultimately [Musk] is a human. And humans get excited about dog coins. That’s just a thing that humans get excited about. I don’t think that Elon has a kind of malevolent intent in any of this.”
The sooner the crypto market learns to stop reacting to every tweet or rumour, the better. In the meantime, we have to adapt to the status quo, which for now is that prices are vulnerable to this type of events.
Chart Analysis – BTC/USD
After a touch of the support at $30,000, Bitcoin jumped higher, showing an almost perfect bounce but the pair failed to crack the resistance at $42,000.
Apart from the rejection seen at support, the signs are bearish for the short term: price is below the 50 days Moving Average, resistance is intact and a significant low has been created. Even if $42,000 is broken, there is still the important level at $45,000 that needs to be surpassed. If this happens, then the chances of a full recovery will increase.
The Relative Strength Index has touched its 30 level and is already moving up and price has travelled a long distance in a short while, which is usually followed by a counter move. That being said, we may see a “rubber band” effect where price moves away from the mean and then it gets “pulled” back towards it but as long as $45,000 stays resistance, the bias stays bearish.
