All that Triggered Bitcoin’s Crash, But Only 15% and Is Already On Its Way Back Up
What started early last week extended into the weekend as Tesla CEO continued his uneducated strikes at Bitcoin, which has the CT seething. The good thing is, the pullback was in line with the 2017 bull market corrections, down 35% from ATH, and the market has already been calling for it, notwithstanding Elon Musk playing catch up with Bitcoin history and getting educated.
As the internet puts it, “Elon woke up and chose violence.”
There’s never a dull day in crypto and this week took it even further.
Bitcoin has already been reeling from Tesla CEO Elon Musk talking about Bitcoin using an “insane” amount of energy. Crypto Twitter spent all week trying to make him, millions of his followers, and the rest of the world explain how that is not all true as Bitcoin not only makes use of renewable energy but has been working towards this goal itself.
While CT, oh so passionately, was involved in making everyone understand and not believe in all the baseless reports that claim bitcoin is destroying the environment, that Musk struck again, sending BTC prices crashing, yet again.
Market was going down with or without Elon.
— TraderSZ (@trader1sz) May 16, 2021
This time, Musk went even further, and he no longer cares for the logic behind his arguments but that he is striking and hitting where he thinks would hurt Bitcoiners the most. But what’s making CT mad is the absurdity of Musk’s claims.
This time he wants to scale blockchain, and he has chosen Dogecoin. DOGE -2.61% Dogecoin / USD DOGEUSD $ 0.32
-$0.01-2.61% Volume 1.72 b Change -$0.01 Open $0.32 Circulating 129.99 b Market Cap 41.08 b 1 d Reddit Co-Founder Reveals His Strong Beliefs for The Ethereum Blockchain 3 d Flare Network Raises $11 Million in Funding to Bring Smart Contracts to All Blockchains 3 d Solana Labs Raises $314 Million for the 'Next Phase' of Onboarding A Billion Users
As for why not create a new crypto from scratch, “Only if Doge can’t do it. Big pain in the neck to create another one,” said Musk. According to Dogecoin co-creator Billy Marcus, he created Dogecoin (DOGE) in two hours.
And what about the major concentration problem of Dogecoin, you ask? Musk’s understanding is “that the big accounts are exchanges. Would be good to confirm, though. Am told the biggest one is Robinhood.”
While Robinhood hasn’t confirmed, the CEO of the world’s leading crypto exchange, Binance Changpeng Zhao, confirms that “the top one (with 30% of total supply) does NOT belong to Binance. I seriously doubt it belongs to another exchange based on usage pattern, etc. I could be wrong. Who told you? Might want to check your source.”
Elon, You Might Want to Research A Bit
Continuing what he started last week, Musk said he would scale DOGE to be faster and cheaper to make it the currency of the world.
“Ideally, Doge speeds up block time 10X, increases block size 10X & drops fee 100X. Then it wins hands down,” said Musk.
[1/4] This is a really positive idea from @elonmusk
Bitcoin is trying to move more in this direction with the Lightning network, capacity may even improve more than 100x with this technology https://t.co/ZJ5R0v1C3k
— BitMEX Research (@BitMEXResearch) May 16, 2021
On Musk’s DOGE scalability plan, Loshan, an active Litecoin (LTC) developer since 2013, chimed in with his “10MB blocks every 6 seconds, with fees so low that anyone can spam attack the network with very little spent on fees?,” Musk had this to say:
“For those bad at math, 100X higher transaction volume with 100X lower fees means total fees earned stay same. Low fees & high volume are needed to become currency of Earth.”
Also, what Musk failed to understand is that Bitcoin is not six months old, coming into existence right when Musk announced his support for the cryptocurrency; rather, it is a decade-old one on which several developers have been working since the beginning.
As CryptoCobain, a crypto OG who hosts UpOnly, stated, “The solution to blockchain scaling was simply to change the variables. Why didn't u think of this Adam Back (cryptographer who is the co-Founder and CEO of Blockstream)?” (it was sarcasm if you missed that).
bitcoin survived its own most elite developers ragequitting and denouncing the system
bitcoin survived a majority of miners proposing game-breaking changes
bitcoin survived an attempted corporate takeover
it can survive an unstable centi-billionaire's mood swings
— nic carter (@nic__carter) May 16, 2021
Musk is actually a few years late as the Bitcoin community had all the controversy, hullabaloo, and everything in 2017 when the debate of scalability led to Bitcoin’s hard fork and created Bitcoin Cash (BCH) which didn’t end there and went to create another hard fork in the form of BitcoinSV (BSV), whose block size is 128 times greater than BTC's 1MB.
So, it makes sense why the crypto community is seething when Musk can't even do the minimal research before spewing all his just-for-the sake-of-arguing comments.
But that wasn’t all; Musk had a lot more to share that he doesn’t actually know about.
Environmental Point Raised, Time To Strike At The Center
Musk has been showing support for Dogecoin for some time now, and while some in the crypto industry don’t like that, with Doge being a meme coin, others don’t care because, for many, the coin was what first got them into crypto and got them hooked onto Bitcoin, altcoins and the technology behind it all.
Those who want Musk to be explicitly a Bitcoiner have constantly been sharing why that is not a good idea and apparently triggered the CEO of the electric car maker.
“This make me want to go all in on Doge,” said Musk and then fired, “Bitcoin is actually highly centralized, with supermajority controlled by handful of big mining (aka hashing) companies. A single coal mine in Xinjiang flooded, almost killing miners, and Bitcoin hash rate dropped 35%. Sound “decentralized” to you?”
Musk further went on to educate crypto “experts” — “Ever heard of PayPal? It’s possible … maybe … that I know than you realize about how money works.”
And yet Paypal is precisely the sort of centralized, omnipotent censoring fin. middleman crypto aims to disrupt and bypass. https://t.co/v5AQFWGDiQ
— 🃏Fiskantes 1(3,3)7 (@Fiskantes) May 16, 2021
But apparently, it was Musk who needed the lesson here as Daniel Brain, lead engineer on the PayPal Checkout team whose bio says he is very interested in Bitcoin and blockchain educated Musk,
“Even at PayPal, we understand the difference between a settlement layer and a transactional layer.”
Moreover, it’s not like PayPal is a decentralized system; the payment processor is actually a centralized one that is not at all censorship-resistant and, in the past, has frozen WikiLeaks accounts.
“Bitcoin exists as a direct response to centralized systems like PayPal. The PoW/energy cost is what frees us from the tyranny of centralized monetary & payment systems that you cherish,” fired back Nic Carter of Coin Metrics.
Bitcoin Hasn’t Matured Yet
In the long term, Musk doesn’t matter for Bitcoin, but in the short term, the prices continue to remain affected as the crypto market works towards maturing. Not to mention the fact, there is no ETF in the market, which, while this incident would give SEC yet another reason to reject it, is actually what the market needs to expand its adoption and for things like these to stop from happening.
It's shocking how fast we went from selling @elonmusk on bitcoin to fawning over him for Tesla's purchases to demonizing him for shilling Doge.
If nothing else, it's a good reminder that Bitcoin is not, never was, & should never be focused on collecting celebrity endorsements.
— Jake Chervinsky (@jchervinsky) May 16, 2021
In response to Musk hinting at selling the Bitcoin held on Tesla’s balance sheet, the price of Bitcoin crashed just over 15% to under $42,150. Musk had a total 27.3% drawdown effect on BTC prices since he announced Tesla wouldn’t accept BTC as payment for its car purchases citing environmental concerns.
Bitcoin is not immune to such price swings; the cryptocurrency record these at FUDs like China banning Bitcoin, which comes out every few months and actually did on Sunday as well.
Following this 35.15% drop from $65k ATH, BTC is already past $45,000 on Coinbase.
Today feels like 2017 bull market (esp. during the fork war). It's not a straight line to the next ATH, but a lot of volatility (multiple -30% dips). HODL🚀 pic.twitter.com/0ddmTbSw8h
— PlanB (@100trillionUSD) May 16, 2021
Bitcoin bottomed around the time Musk clarified the speculation that “Tesla has not sold any Bitcoin,” meanwhile, his personal holdings’ are anyone's guess at this point.
Worth noting is the fact that Tesla actually made more from its Bitcoin sales than it did from selling its cars.
Once again, fuck you for letting everyone think you did, purposefully.
Has not sold any, YET.. https://t.co/iFm77sNTQ9
— Don't follow Shardi B if you hate money (@ShardiB2) May 17, 2021
But what's interesting is that, long before this attack on Bitcoin from Musk, analysts have been calling for a correction, some like trader DonAlt have already been leaning towards bearish sentiments and pointing to next support at $38,000, which would be a “decent level to chance a long or two if we should go there,” he said.
Bitcoin December contract on derivatives platform Deribit actually traded at 38k briefly.
Not to mention, the 2017 bull market experienced several, at least nine pullbacks of 30% to 40%, which means this is nothing out of the ordinary, in fact, not even the worst the market has seen yet, compared to the previous cycle.