Elon Musk’s trigger-happy Twitter fingers have left the bitcoin world in a tizzy in recent days.
As the Wall Street Journal noted in a recent piece, Musk has become bitcoin’s “biggest influencer” — much to the dismay of many evangelists. Since he first tweeted that Tesla would stop accepting bitcoin as payment because of environmental concerns, bitcoin has fallen about 40% from its all-time highs.
More recent tweets about Musk working with North American miners on addressing environmental concerns have pushed the crypto from lows near $30,000.
On this most recent episode of The Scoop, Martin Green, who leads quant investment firm Cambrian Asset Management, explained why Musk’s tweets are having such an outsized impact on the crypto market. In Green’s view, it’s not so much Musk’s tweets that matter but the environment into which he is tweeting.
“Often the news itself, like Elon’s tweet, would have a different consequence in a different situation,” he said. “You can light a match in the middle of my driveway… you can take that match and drop it on the floor in an open space. Monstrous difference in the consequences. Still the same match.”
Green said that the crypto market has been primed to overreact to market news thanks to the amount of leverage in the system, which creates “a cascading of selling pressure.”
The lack of institutional spot buying recently has added fuel to the fire.
Still, Green said there are a number of tailwinds for the industry. He said that there are macro forces that indicate that institutions are under-allocated to the crypto market, noting specifically that Ethereum is “quite under-owned.”
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