https://trends.google.com/trends/explore?date=now%201-d&geo=...
and https://www.coindesk.com/price/bitcoin
At 3pm PT on 5/12, Bitcoin was at $54.6k USD. Musk tweeted https://twitter.com/elonmusk/status/1392602041025843203 at 3:06pm. Two hours later, BTC was at $47.7k. One cannot blame the media on this, and it's not the result of macroeconomic news.
Kinda insane that a single guy can make almost the entirety of the crypto market swing 10-20% every time they mention crypto.
Eventually he either realized or had it pointed out that the environmental controversy would be problematic for an electric vehicle company.
Any Mathcoin (or any trade) is an exchange based on energy spent (not including Mathcoins insane transaction cost). It's an abstraction from someone mining for materiel from the ground and trading. An energy cost is involved.
What's the killer use case? I can just as easily purchase wine, art, or goods which appreciate and will indefinitely hold a non zero value, even if civilisation comes to a halt, someone wealthier than me will want to get drunk.
If the use case is a fungible, I'm good. If I want to do illegal stuff, I can just as easily launder those goods the same way.
p.s. if you buy expensive wine in restaurants, thanks.
Are you saying AGIs will earn a living by operating a cryptocurrency mine?
A lot of people were already astronomically up on their DOGE holdings; having its biggest advocate in recent memory (recall Musk crowned himself "Dogefather") basically dismiss any hint that it might be a "serious" coin amounted to a signal that $0.70 was peak DOGE (IMHO).
Given that this latest quip from Musk is explained as being related to concerns about BTC's power consumption problems, I wouldn't be surprised to see him in the near future pumping another altcoin that advertises as having a power efficient network like NANO.
No one actually needs Bitcoin. If Bitcoin disappeared right now, who would lose besides the people who hold Bitcoin? No one. If you want to circumvent the banks there are other ways to do so and very easily so.
It's the biggest speculative bubbles of all time. And at the same time I believe it's a very important innovation by the way (solving the double-spending problem, or more precisely, making it good enough).
The difference with BitCoin is that you can't go to a farmer and buy his goods, or pick up a used car, go to an auction, or take a wedge of greenbacks and disappear.
Until that becomes a ready reality, BitCoin is separate from actual trade, and completely vulnerable to speculation.
Currencies are a shared dream, stop believing and they Tinkerbell. That said, a BitCoin does have a definitive value, and won't go away. But it's certainly not $50k.
This happens completely independently of USD inflation. If USD inflation goes up then Bitcoin may go up by the same amount. However, inflation may affect hoarding instincts in either direction, which can wipe out the influence of inflation on the price of Bitcoin.
For example, people may liquidate Bitcoin to buy commodities that are going up in price. The gasoline pipeline incident causes a shortage of gasoline, people start hoarding gasoline because it goes up much faster than the CPI average but Bitcoin itself can only protect against the CPI because Bitcoin holders want to buy things other than gasoline. If you are a consumer that needs nothing except gasoline then you would believe your Bitcoin are worth "CPI Bitcoin price" * (1+gasoline inflation rate). E.g. 25% gasoline inflation means it is worth 25% more than market rate, because you need 25% extra just to stay where you are.
The obvious problem is that there are some goods that went down in price. Assuming 20% deflation, someone else is willing to accept 20% dollars less for his Bitcoin. The average of both is 5%, therefore the "CPI Bitcoin price" would go up 5%. However, since the gasoline guy wants the 25% gains, it makes more sense to liquidate Bitcoin and buy gasoline directly but the deflation guy remains, which paradoxically drags the price of Bitcoin below inflation because it no longer tracks CPI but rather the CPI without the things that went up.
And now, please reciprocate, why do people need Bitcoin? If Bitcoin disappeared right now, what would anyone (besides people who are holding it) be losing?
Yes, the Fed has committed to allowing some >2% inflation to make up for past <2% inflation, but it's still the case that policy might tighten one day, and higher inflation now still brings that day closer than it would have been with lower inflation.
It's the same thing with Turkey, Argentina, Zimbabwe etc. They suffered from poor farm yields. Turkey needs more investment into agriculture chemical companies, Argentina suffered a drought in 2018, Zimbabwe had land repossession but financial problems and lack of education prevent the new owners from farming on the land they acquired for free.
If Turkey can do enough investments it can solve its agriculture problems. If Argentina can diversify away from agriculture it will be less prone to droughts. If Zimbabwe supports farmers it can become self sufficient again. These are examples of persistent shortages, something fundamental broke there and the only way this can be fixed is by raising interest rates, crashing hard and then reallocating the economy to the things that are actually important.
I guess because right now a big percentage of bitcoin price comes from speculation and not from people realizing its deflationary potential. Which probably will change in future.
The other factor is that the US has adopted the USD. The actual reason (e.g. guns) doesn't matter, it only matters that the decision has been made. You can buy things in the US with USD. Therefore the value of the USD is tied to how much stuff a dollar buys you.
The size of the Bitcoin economy is quite small. There are not many things whose price is denominated in Bitcoin, most shops just convert from the dollar price to Bitcoin, which means there is barely any price stickiness that keeps the value of Bitcoin stable. If anything it supports the instability of the exchange rate.
The inflation argument makes no sense. Inflation would cause BTC to go up in value. Something else is causing BTC to drop in value.
Personally, I think this has more to do with Vitalik's $Billion donation to charity. What do you think would happen when a whale decides to sell $1-Billion worth of various cryptocoins? I bet they're liquidating all of those various cryptocoins into BTC, and then using the large BTC-exchanges to convert it into fiat.
All this Tesla stuff seems like a red-herring to me.
When the price is stable for hours then collapses after an event, you can pretty safely infer the correlation.