Not even a week after Elon Musk’s effect on DOGE, a sudden U-turn has performed on Bitcoin. Tesla Inc. CEO Elon Musk has suspended accepting bitcoin as payment due to environmental concerns. Consequently, a dip is inevitable, and Bitcoin’s price dropped 5% while after the announcement.
While three months ago, the crypto market plight had boosted over the pledge that Tesla would begin accepting BTC as payment, well, it seems not going to happen now.
The BTC turmoil
On Wednesday evening, Musk tweeted that the BTC suspension as payment according to the increasing use of fossil fuels for Bitcoin mining and transactions. The company claimed that they would restart using BTC if the mining is sustainably less energy-intensive.
However, the blaze had started since Tesla bet $1.5 billion investment on BTC earlier this year and soared BTC’s price to 14%. Musk got criticized over this amount of investment in cryptocurrency because it’s conflicting with Tesla’s green credentials. Although the sudden stop of crypto euphoria, Tesla got their pay-off and made $1 billion on its purchase in the first quarter of 2021.
Bitcoins mechanism operated without any centralized party in control. Practically, bitcoins are created by using a concept called proof of work which initiates a computational puzzle that consumes a large amount of electricity. Today, the bitcoin’s annual consumption par to Poland’s, estimated to be 148 terawatt-hours and severely using coal power station. This enormous amount of power sucker makes bitcoins could have a vaster environmental impact, as more computers deployed to find bitcoins.
On the contrary, the market plunged more than 5% drops when his tweet hit the public. Over the previous 24 hours, BTC trading around $48,769 as of 21:00 UTC (4 p.m. ET) has to lose 10%. Consequently, BTC loses 10% Thursday as of press time and going as low as $47,720 around 01:00 UTC (9 p.m. ET).
The values linked with BTC make Tesla’s share dropped more than 11% on Tuesday. Tesla shares closed down 8.55% on Monday, as investors betting on a pandemic comeback rotated out of Big Tech and piled into cyclical stocks. Even Ethereum has down 10% to trade around $3,651.
Elon bites, Doge bounces
Doge has bounced back 47% on Friday as of press time. According to TradingView, Doge is up over 12,000% on Binance in summed 2021 itself. Musk himself can persuade its prices only by his charity in hand. It somehow sketched the comical appearance along with Doge, which drives its wave and Musk as their prophet.
“If anything, what this is revealing is the sensitivity of the new money in the space,” said Vishal Shah, founder of derivatives exchange Alpha5. “Right now, the drivers are mostly macro, and hence correlation to other assets is back in the cards.”
The Doge ecosystem has concentrated wealth which embodied the marketization of the currency circulation. Take a look at the Doge ecosystem according to blockchain data from Bitinfocharts, one person holds 28.8% of all Doge in circulation, and just 102 wallet holders own another 38.5%. So 67% of all Doge is effectively controlled via 103 wallets.
Despite this, the Doge furor hasn’t moved in tandem with Bitcoin. Since October 2020, the nearest correlation between the two, the Doge-Bitcoin correspondence, has fallen near zero. Or, it very much depends on whom going to unilaterally dictated its journey, as Musk considerably will utilize Doge in the future. And it becomes likely since Doge uses less energy per transaction than bitcoin because the calculations used to mine coins are less complex.
Another options market, who’s dominating the dump
If one thing to pinpoint, the culprit of Bitcoin struggle is the options market. Market makers were gradually in the range of $52,000 to $50,000. And under its push-pull is estimated to sell nearly 2,900 bitcoin during the crash to counteract the short gamma exposure. Moreover, another recent factor is Altcoins that intrigue and more exciting in the moment.
The Bitcoin constraint is also relating to the differentiation between several crypto assets. Jason Lau, chief operating officer for San Francisco-based exchange OKCoin, admits that ETH and DOGE continue to pop while BTC keeps moderate. Also, ETH serves the trader’s bubble that might be comfortable since it stays application-driven and mitigate volatility. So does Doge’s comfort zone is steam on the tidal of meme or momentum-driven.