Elon Musk is responsible for another turnaround in Bitcoin. Is it a pump and dump scheme?

June 18, 2021 at 10:54 a.m. // News

While the digital currency market continues to soar for months, Elon Musk, the CEO of Tesla and SpaceX, has disproved claims that he is a person behind the current Bitcoin pump-and-dump program in early 2021.

He went on to reveal that the e-car company will invest again in Bitcoin, the world’s largest crypto-asset, once its mining operations go green by taking into account a fair share of clean energy use.

Because of the market volatility, many experts, including Magda Wierzycka, the CEO of a financial company called Sygnia, accused Tesla of price manipulation. However, Elon responded to these allegations on Twitter with the words: “That is not true.”

Why does Tesla have to pump-and-dump the Bitcoin price?

Earlier this year, Musk announced that Tesla had invested more than $ 1.5 billion in the world’s largest crypto asset by market cap, according to CoinIdol, a global blockchain news agency. After that move, the BTC price soared to an all-time high of over $ 64,000, meaning that this investment drove Bitcoin value soaring.

When Musk again announced that Tesla would no longer allow Bitcoin payments for its electric vehicles because the mining operation uses a lot of electricity, the price of the coin fell, reaching a low of $ 30,681.50. Hence, it was believed that he secretly invested in the crypto asset so that he could pump up BTC and then sell it when the price rises again.

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In an alleged attempt to drive the price up, Musk has now revealed that Tesla would again accept BTC transactions as soon as there is a justification for BTC miners to use around 50% renewable, zero-emission sources with a “positive future trend” to use. ”

Following news that Tesla may be accepting BTC payments again, the BTC price soared dramatically to over $ 40,000. Shortly before the announcement, Bitcoin was priced at $ 34,864, market cap of $ 732.465 billion, and volume of $ 40.669 billion, but after the announcement (June 13), BTC / USD price rose to now $ 40,978.36, a market cap of $ 767.7 billion, and a volume of $ 50.5 billion. This means that the BTC price has increased by about 18% and the market capitalization has increased by 5%.

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Nonetheless, in response to the company’s motivation to sell its cryptocurrency investment, which resulted in approximately $ 272 million in revenue after a large number of tweets on Twitter and therefore touted the crypto asset higher, Musk responded that Tesla only owns nearly 10% of BTC – Stocks of sold determine if BTC could be easily liquidated without shaking the market.

Will the SEC get involved?

Elon Musk and his companies have long since got used to stirring up dust in the market. However, if the allegations can be backed up with actual evidence, the billionaire could face investigation and legal proceedings. What he did could be viewed as market manipulation, which sparked an SEC investigation.

The US Securities Exchange Act defines market manipulation as “transactions that create or maintain an artificial price for a tradable security”. So if Tesla and Elon are found guilty, they would be severely sanctioned by the regulator and heavily fined.

On the flip side, there seems to be more excitement than actual guilt. Previously, Musk’s announcements sparked a 100 percent surge in the share price. Now it’s about 10%. Not a big deal for the market compared to previous rallies. Targeted manipulation would likely have generated a greater profit. However, the situation is difficult to assess as it is still short-term.

What do you think Elon Musk is trying to intentionally manipulate the cryptocurrency market? Let us know in the comments below!

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