Observation | Elon Musk's cryptocurrency war

Then-President Trump tweeted, "The 10% Tariff the United States has imposed over the past 10 months on $200 billion worth of Chinese imports will be raised to 25% on Friday."

The next day, both the Shanghai and Shenzhen stock markets opened lower, with the Shanghai Composite Index falling below 3,000 points. At the close of the day, the Shanghai Composite Index fell 5.58%, the Shenzhen Component Index fell 7.56%, and nearly 900 stocks in the two markets hit the daily limit.

For the first time, Chinese stock investors felt the fear of being dominated by Trump's "Twitter governance", and now the same fear has befallen Bitcoin investors.

On May 13, Musk, the new king of Twitter, said, "Tesla has suspended the use of Bitcoin to pay for car purchases, but will not sell any Bitcoin" because:

Concerns about the rapid increase in the use of fossil fuels in Bitcoin mining and transactions.

Bitcoin electricity will pollute the environment, while Tesla electricity is pure electricity. Yang Yongxin wanted to laugh when he heard this.

However, the University of Cambridge’s 2020 Global Cryptoasset Benchmark Study showed that 76% of cryptocurrency miners use renewable energy to generate electricity for mining.

Although, in April, Twitter CEO Jack Dorsey retweeted a paper titled "Bitcoin Incentivizes the Development of Renewable Energy" on Twitter, Musk actively praised and expressed his approval.

As soon as Musk's remarks changed, Bitcoin plummeted, and the 24-hour decline once expanded to 16%, falling below $46,000 per coin.

In February, Musk suddenly wrote "Bitcoin" in his signature column; Tesla announced that it had purchased $1.5 billion worth of Bitcoin and subsequently accepted Bitcoin as payment currency.

Three months later, Sichuan Opera master Musk suddenly changed his attitude, used Twitter to govern the currency, and played with cryptocurrency and his fanatical believers to the applause of the people.

Split

“Sell Tesla stock, cancel orders, sell cars (Tesla)”

After Musk blasted Bitcoin for not being "environmentally friendly" enough, several Bitcoin enthusiasts posted screenshots of canceling their subscriptions for Tesla's Cybertruck pickup truck, and in the investment community, they denounced Musk as a traitor and called for the sale of Tesla stock.

David Portnoy, an American internet celebrity stock trader and founder of Barstool Sports, released a video, angrily accusing Musk of suppressing Bitcoin and raising Dogecoin.

“This guy is pulling the lever like the Wizard of Oz, everyone is tracking his every move, he’s making Dogecoin go up, he’s making Bitcoin go down, shit!”

In just a few months, Musk went from a "Bitcoin missionary" to an industry public enemy. What exactly happened?

In February, Musk said in an interview that he knew about Bitcoin as early as 2013. He also said that he regretted not buying it at the time when the price of Bitcoin was less than $1,000. In the same month, Tesla announced that it had purchased $1.5 billion in Bitcoin.

However, today, the market value of Bitcoin has reached one trillion US dollars. Even though Musk was once the world's richest man, in the Bitcoin world, he has always been a latecomer and the "receiver" of the early Bitcoin Hodlers.

Musk, who is used to being the protagonist, is naturally unwilling to be just a bearer of Bitcoin. Fortunately, he also has another identity - the former CEO of DOGE (Dogecoin).

This is a MEME coin that was created to mock Bitcoin, but was abandoned by its founder and treated as a joke.

Musk encountered Dogecoin in 2019.

On April 1, 2019, April Fools’ Day, Dogecoin’s official Twitter account published a survey asking who should be the next CEO of Dogecoin? (April Fools’ Day joke, Dogecoin was already quite decentralized at the time).

The final result was that Musk won with 54% of the votes.

After being informed on Twitter, Musk gladly accepted the "position" and changed his Twitter profile to "CEO of Dogecoin", but later, he seemed to feel that something was wrong, so he changed it to "former CEO of Dogecoin".

Since then, Musk seems to have fallen in love with Dogecoin, "It (Dogecoin) is so cool and may be my favorite cryptocurrency."

Dogecoin developer Nickel said in a recent interview that they have been working with Musk since 2019. Musk provided "a lot of advice and suggestions" and shared his vast network of contacts, but the development team rejected the funding he offered.

In other words, Musk began to lay out Dogecoin in 2019, and it was not until 2021 that he officially stepped into the spotlight, from being the former CEO of Dogecoin to the godfather of Dogecoin.

In February 2021, Musk sent three tweets in a row for Dogecoin, saying that Dogecoin is the currency of the people and the cryptocurrency of the future. After that, he even said that Space X would bring a Dogecoin to the moon.

Under Musk's cheering, the MEME token, which undermines authority, quickly went from being a niche humor to the mainstream, and as a result, its price skyrocketed.

With a one-year increase of more than 200 times and a market value that once exceeded US$80 billion, Dogecoin is even more popular than Bitcoin on social platforms.

Musk made Dogecoin popular, and Dogecoin has become Musk's ticket to enter the world of cryptocurrency.

For a while, the surge in Dogecoin ignited the public's enthusiasm for investing in cryptocurrencies. From China to the United States, from Robinhood to TikTok, yellow dog heads can be seen everywhere, but behind the dog head carnival is the loneliness of another group of people.

opposition

Compared to the high $50,000 Bitcoin, young people and new players seem to prefer this yellow dog head.

Dogecoin has increased by more than 200 times in a year, while Bitcoin has only increased by 4 times. Driven by Dogecoin, animal MEME coins such as Shiba Inu, Corgi, and Husky have become hot spots for speculation, and air coins are in vogue.

As for Bitcoin, its growth has been sluggish, and its market capitalization share in the cryptocurrency market has fallen from 70% to below 40% within a year. Many Bitcoin bosses are getting restless.

On May 2, Bitcoin tycoon and founder of cryptocurrency commercial bank Galaxy Digital Mike Novogratz advised investors not to buy Dogecoin and should sell it. For this reason, Galaxy Digital even wrote a 22-page report criticizing Dogecoin.

On May 8, Barry Silbert, founder of Grayscale Investments, couldn’t sit still and tweeted: “Okay, DOGE guys, it’s fun. Welcome to the world of crypto! But now is the time to convert your Dogecoins into Bitcoin.

Barry also said that he has started shorting Dogecoin.

Grayscale Investments, the "open dealer" of Bitcoin, whose Bitcoin Trust Fund holds more than 650,000 bitcoins worth more than US$32.2 billion, has not had an easy time recently.

From March to date, the number of bitcoins held by Grayscale has decreased by more than 50,000, and the GBTC it issued has continued to have a negative premium, at one point exceeding 20%, indicating insufficient demand and heavy selling pressure.

Calling on investors to sell Dogecoin and restore the glory of Bitcoin is in line with its position and interests.

However, "short Dogecoin" may be the words Musk hates to hear the most.

Tesla had previously been the subject of massive short selling, and Musk therefore hated short selling institutions.

As early as 2018, Musk sent a "short box" full of shorts to the famous hedge fund manager David Einhorn, just because David had shorted Tesla stock heavily.

In the GME short squeeze battle at the beginning of the year, Musk stood on the side of retail investors, supported the short squeeze, and called himself "MEME, the Air Force Destroyer."

Now, when Dogecoin, the "son" of Bitcoin, is being shorted by the bigwigs of Bitcoin, Musk, as the godfather of Dogecoin, resolutely stepped forward, jumped to the other side, and attacked Bitcoin.

On Tuesday, Musk asked his fans on Twitter whether Tesla should start accepting Dogecoin as a payment method. The vote has now ended, with nearly 4 million people participating, and 78.2% of people expressed support, which is likely to replace Bitcoin and support Dogecoin to take over.

On May 16, Musk tweeted that ideally, Dogecoin could speed up the block time 10 times, increase the block size 10 times, and reduce transaction fees 100 times, and then it would easily win.

Musk's ambition is obvious; who does Dogecoin want to defeat? Everyone knows it.

Since Musk chose Dogecoin in 2019, this division and confrontation was bound to come sooner or later, but Barry lit the fuse in advance.

This is a war between the ambitious Musk and Wall Street tycoon Barry Silbert, and also an internal war in the cryptocurrency circle between the Bitcoin community and the Dogecoin community, which is about positions and interests.

Playing stocks

Long before Twitter started governing the cryptocurrency, Musk was already familiar with how to influence stock prices through Twitter. Tesla and other companies' stocks had all been his prey.

On April 1, 2018, April Fools' Day, Musk tweeted that "Tesla is bankrupt" and "completely and totally bankrupt", and Tesla's stock price plummeted by 7%.

On May 1, 2020, history repeated itself when Musk tweeted, “In my opinion, Tesla’s stock price is too high.” As soon as he finished speaking, Tesla’s stock price plummeted by more than 11%, and its market value evaporated by $14 billion.

Others cannot short Tesla, but Musk himself can.

In 2021, the liquidity frenzy brought about by the Federal Reserve's monetary easing made Musk the "Twitter stock god."

At least six companies, including e-commerce platform Shopify and game maker CD Projekt, are beneficiaries of Musk's tweet.

On January 7 this year, Musk posted a tweet with only two short words: Use Signal.

Unexpectedly, as soon as the tweet came out, the Texas-based medical equipment company Signal Advance soared, with its stock price rising by 1,500% in 24 hours. From the close of the 7th to the 11th, the three trading days accumulated a 6,350% increase, and its market value climbed from US$7 million to US$480 million.

Although, Musk’s tweet actually referred to a recommendation for a communication software called “Signal”.

Amid the frenzy of Musk worship, who can stop Musk from continuing to “use Twitter to trade stocks”?

On March 12, a Tesla shareholder sued Musk, accusing him of violating a Twitter posting agreement reached with the U.S. Securities and Exchange Commission (SEC).

The plaintiffs alleged that Tesla investors suffered billions of dollars in economic losses due to Musk's erroneous posts on Twitter and the failure of Tesla's board of directors to discipline him as required by the U.S. Securities and Exchange Commission.

Since then, Musk has turned his attention more to cryptocurrencies, and he has thrived in the relatively unregulated cryptocurrency world.

A sentence or an expression can make investors crazy. Shiba Inu Coin (shib) and other zoo air coins soared a hundred times because of his casual remark "I'm looking for a Shiba Inu". Musk controls currency through Twitter, and he can make clouds and rain with a flip of his hand, becoming the crypto king on Twitter.

Luo Xiang, a well-known law teacher, said that if freedom cannot be restricted, it will inevitably lead to the exploitation of the weak by the strong.

At this time, Musk seems to be intoxicated with becoming the religious leader of the Dogecoin community and enjoying the unparalleled popularity.

religion

In 2016, Bob Lutz, a former vice president of General Motors, called Musk and his followers "a fanatical religious group" in a news interview.

There is a group on Linkedin organized by Musk fans called Musketeer, where they pay attention to and exchange information about Musk, Tesla, etc. In the eyes of some Muskteers, no negative news about Musk is allowed. Once there is doubt about Musk or his company's finances, members will attack him in groups.

Since the death of Steve Jobs, no one is more suitable than Musk to be the next leader of the religion of technology, because everything Musk does seems to be summed up in the grand ideal of religion: to embrace Mars for the future of mankind.

Why do Space X? Research and development to reduce the cost of space transportation and send humans to Mars;

Why do you want to be Tesla? To solve the transportation problem after settling on Mars;

Why SolarCity? To solve the energy problem after going to Mars;

Why did we start The Boring Company? To solve the transportation problem after immigration to Mars;

Why do we need Starlink? To solve the communication problem after Mars immigration;

Why Neuralink was founded – to deal with the threat of super artificial intelligence;

So, why promote Dogecoin? What is the value of Dogecoin?

"Let Dogecoin become the currency of Mars" has become a legitimate and imaginative answer. On May 10, SpaceX will accept Dogecoin as the exclusive payment method for launching the lunar satellite DOGE-1.

Interestingly, Musk had previously announced that Mars would not be subject to Earth laws.

"For services provided on Mars, or while en route to Mars via Starship or other colonial spacecraft, the parties acknowledge that Mars is a free planet and that no Earth-based government has the authority or sovereignty to regulate activities on Mars," Starlink's beta consumer terms of service read.

In theory, Musk could indeed colonize Mars and make Dogecoin the currency of Mars, which would undoubtedly be the most epic story of cryptocurrency.

But what if it fails?

Today, Dogecoin is still a speculative product with price cycles. It can rise a hundredfold or fall 99%. When the bull market ebbs and the price of Dogecoin collapses, where can the trapped people put their injured wallets and anger?

Musk has tied himself to Dogecoin and made himself the spokesperson for Dogecoin. If he fails to protect the price of Dogecoin, after the collapse, he may face the backlash from the deification movement. The higher it is praised, the harder it will fall.

In the ignorant age, people created gods out of ignorance and fear; in the civilized age, people created gods for the interests and needs of certain groups.

People always like to build a statue and then tear it down. This is true throughout human history.