I can’t believe I’m making this video. Elon
Musk’s Tweet and the founder of Ethereum’s move seems to have caused a downward turn of around
300 billion dollars in a few hours according to Forbes. From what I saw almost all the top gaining
cryptocurrencies on the market went red dropping about double digit percentages, this is an actual
screenshot I took on Binance just some hours after Elon Musk’s tweet. I’ll explain what this means
and what I think could happen next. This is a very critical point for crypto currencies and not just
because of one person. Let’s talk about money. Hey what’s up guys, it’s Fisayo here and welcome
to another episode of Finance Friday. Where I take a pause from tech and talk to you guys
about finance and the economy. If you’re new to the channel, welcome, if you’re returning,
welcome back. I’d appreciate it if you could hit that like button if you eventually find this
video useful or valuable in someway, by hitting that like button you will definitely help other
people discover this video and understand the analysis we’re about to share.
#FodaAdu, let’s get to the video. The first thing we’ll talk about is Elon
Musk’s tweet. Straight out the gate. Elon Musk has been one of the biggest influencers
for crypto currencies. First off Elon Musk, a very successful person in his own niche, he’s the CEO
of Tesla or as someone that likes memes a lot, he calls himself the Technoking of Tesla. He firstly
announced in February of 2021 that his company was buying 1.5 Billion Dollars worth of the bitcoin
cryptocurrency. This was 2 months after he had a discussion with Michael Salylor one of the
Bitcoin Billionaires that’s also very bullish on Bitcoin this was on Twitter.
The aim was to
put some of his company’s cash in assets that makes sense and also that he hoped Tesla would
accept payments for their cars in Cryptocurrency, specifically Bitcoin. This was met with a ton
of positive feedback. The bitcoin price rose to a very new high, over 42,000 dollars from
around 30,000, too put this into perspective, if someone invested in a popular index fund on
the stock market that grows 5 percent a year, it would take them 6 years to gain that
kind of money and this happened in a few hours, people bought more to store their valuable
cash and it was believed that Tesla made over 100 million dollars from that move.
Elon Musk also was
a major fan of Doge coin which has seen very new highs and millionaires. It’s been around 4 months
since that announcement in February was made and just this week in May of 2021, Elon Musk says
they have suspended accepting bitcoin payments for Telsa. Bruh. Only 4 months? The reason they
gave was that they were concerned about rapidly increasing use of fossil fuels to mine bitcoin.
They stated that they won’t be selling any Bitcoin and would probably look at other cryptocurrency
using less than 1% of Bitcoin’s energy. Well as you’d expect, this not so great news didn’t
sit right with alot of people and it cause the double digit drop in many cryptocurrencies
and bitcoin tanked as much as 17%.
Ahhhh So what does this mean, first off, as at the time
of making this video, things have sort of gone back up but not as high as before. However,
according to Forbes, as much as 300 billion dollars was taken away from the crypto market and
the market is said to be worth around 2 trillion. The reason is pretty simple as complex as
it seems. The first thing to note is that Tesla is an electric vehicle making company. The
whole idea or most of it comes from the branding perspective (or the look good perspective)
that Tesla Is making the world a better place by ensuring that we don’t use fossil fuels, like
we exclusively do here in Nigeria and most of the world.
Because it is better for the environment.
Elon Musk is also the Chairman of SolarCity, a company that wants to make most homes go
the solar round for energy. So going Electric and not using fossil fuels means our
carbon footprint is low. However, there are reports that the carbon footprint
or amount of fossil fuels and energy used in mining bitcoin is very enormous and it’s not
good for the environment. Of course, this would make a company whose goal among many others
is to reduce carbon footprint look really bad. This is the headline reason for why his tweet was
To protect his company and the environment. Then there were critics that asked if he
didn’t know this was the case before investing, or if he’s intentionally manipulating the
markets. There’s no answer to that unless you ask Elon Musk himself. It’s very possible for an
influential person like him to move the markets, a critical example can be seen with Doge coin.
His tweets and him constantly hyping up the doge crypto makes the price go up and up and made a
lot of people pour billions into the doge coin market.
But there’s no use for Doge coin per se
than just speculation. The founders or developers of Dogecoin even didn’t put much thought into
it and it’s generally regarded as a meme coin. This meme coin has made alot of people rich
and Alot of others, lose alot of money. Now, when that tweet came along, Doge coin also
fell really hard. The funny thing is Elon also made a follow up tweet many hours later that
he said he was working with Doge developers to improve system transaction efficiency, this
made Doge coin rise by some 30 percent. Again, crazy how influential
he has become over the market.
We’ve seen cryptocurrency rise and fall like
crazily. There was the historic crash from $20k to $3k. It is very volatile and as much as you
can gain, you can as well lose a whole lot so even buying the Dip might not necessarily work out
because you don’t know if that’s the dip in itself. Imagine those people who had it at 20k
and it dropped to 10k, they. Might think that that’s the dip only for it to go further down
to 3k. This is why many governments have sort of a trade at your own risk policy, Crypto is
unregulated and not owned by 1 person and this decentralized nature is one of the highest reasons
for its appeal, unfortunately unlike traditional stock markets that can get government bailouts
or even deposit insurance when it crashes, Crypto currency crashes leave the victims
with nothing really.
Some countries outrightly ban it and here in Nigeria, the government has
removed banks from participating in that sphere, if you transact with cryptocurrency or you put
it in the narration of your account. You will get flagged and your account will get blocked. I
made a video about that and you can watch it with the link in the description below. Another side of
the spectrum that governments like Nigeria look at it from is that fact that cryptocurrency, because
it’s anonymous and not owned by one entity, it is easy used to launder money or for fraudulent
purposes, for instance, there was a report that said people got gift cards illicitly and
easy traded them for crypto which is kind of like getting free money or also in worst case
scenarios, scamming. This doesn’t negate the fact that some countries suffer from bad exchange
rate and difficulty to actually get good investment programs or worse even access foreign
exchange either for transfers or for payment. Nigeria for instance is excluded on
many payment platforms and we were recorded as the second highest crypto market
on Paxful Hence, crypto is just as valuable.
All of the risks associated with crypto currency
has seemed to have been a little managed now or have been a little less obliterating thanks to
Institutional Investors coming in to the space, billionaires like Elon Musk also adding a lot
and cryptocurrencies being listed on many huge exchanges and Visa giving people ATM cards for
crypto. They brought legitimacy to crypto currency and of course we see huge adoption and boom
but it’s still very much in the early stages. The fact that Elon Musk’s Tesla has as much as
1.5 billion invested could cause even higher sell offs and drops in the market prices if they
sell their holdings. Similarly, and speaking of selling all holdings, the founder of Ethereum
also did the same with a meme coin of a meme coin can SHIB, according to Bloomberg, the Shiba
Inu coin gave a $1 billion gift to which he gave or donated to charities as a relief
fund. This made the coin go down 38%. I saw that live and I can’t just imagine
how much loss that would have been. In the end, one has to trade responsibly in these
There’s Bitcoin which aims to replace gold and act as a means of exchange, then there’s
Ethereum which is more of a technological solution and has even better use cases with NFTs, some
other coins also have problems they’re solving so it’s best to understand what you’re most
likely investing in. Like I always say, if it seems too good to be true, it probably
is. My last video, the last finance Friday episode talks about Ponzi schemes and this is
how people can get scammed.
The price is pumped up to a really high level and everything just
drops when many heavy investors or whales cash out. If you don’t understand the markets,
you are better off saving your school fees or children’s school fees and not investing
in it, but if you’re interested you can learn more about it. There are courses even about
crypto currencies and what its value is. The whole idea of cryptocurrencies is good because of
the decentralization but the markets today seem like they are more about people’s emotions. If you
have to, learn and invest in what you understand. That’s It from me this Friday, what are your
thoughts about the cryptocurrency crash, Elon Musk and do you have any questions
for me? Leave them in the comments below. Do hit that like button if you
found this video useful and hit that subscribe button + the bell icon beside
it so you’ll be the first to know when I post a new video.
Thank you so much for
watching and I’ll see you in the next one..