A few weeks ago, I pleaded with Elon Musk to stop tweeting about cryptocurrencies over the weekend. Unsurprisingly, he didn’t listen. Yesterday, in a Twitter reply to an article that accused him of allegedly pumping and dumping bitcoin, he stated that Tesla (TSLA) would resume accepting bitcoin if mining uses mostly clean energy. The chart below shows the price movement before and after that reply:

3 Day Chart, Bitcoin vs USD with annotation from Musk Tweet

(Click on image to enlarge)

Source: Bloomberg

That one tweet caused a nearly 10% jump in the cryptocurrency, which was then further boosted by a positive comment by Paul Tudor Jones on CNBC. Never mind that there is scant evidence that anyone had actually bought a Tesla using bitcoin except for once in 2013; the mere thought that someone could potentially buy one of their cars with bitcoin is obviously captivating the market. 

At the time, I expressed skepticism about the stated reasons for TSLA’s decision to stop accepting bitcoin. I found it incredulous that a talented engineer and advocate for cryptocurrency would suddenly discover that bitcoin mining was a huge energy hog. Instead, I laid out the reasons why anti-money-laundering (AML) concerns were a more likely motivation for the timing of that move. Shortly after the announcement, news broke about an investigation into Binance, and there were reports that the US Treasury would require special reporting of any cryptocurrency transaction with a value greater than $10,000.Tesla cars certainly fall into that category, so it would not be a stretch to think that the company would want to avoid that hassle. Blaming environmental concerns is more palatable than blaming AML concerns.

Far be it from me to accuse Elon Musk of obfuscating his crypto motivations to engage in pump and dump tactics in bitcoin. But over a month ago, in the wake of TSLA’s last earnings release, I asserted that there was a real incentive for him to use his power over the crypto market to bolster TSLA’s bottom line. The timing of this rally could prove quite convenient, coming just over 2 weeks from the end of the second quarter. It would be a boon to TSLA’s 2Q earnings if the company added to its bitcoin holdings recently and sold them into this rally. Done properly, they could continue to assert that they sold no more of the company’s original bitcoin stake.

If nothing else, the reaction to Musk’s tweet shows who really influences the action in bitcoin. Just over a week ago, from June 3^rd – 5^th, there was a well-attended, heavily hyped Bitcoin conference in Miami. Speakers included some of the most influential voices in crypto, and the financial news networks covered it closely. Yet when the conference was over, bitcoin had hardly budged. In fact, it sold off slightly in the conference’s wake. The dip that occurred later in the week coincided with Microstrategy’s (MSTR) bond offering, where the money was raised specifically to buy more bitcoin. (That purchase is working out well for now.) This is evidenced by the chart below:

12 Day Chart, Bitcoin vs USD

(Click on image to enlarge)

Source: Bloomberg

Put this in perspective. A three-day event designed to tout bitcoin had no obvious positive effect on its price.(The conference’s main legacy may be as a post-vaccine Covid hot spot). A company raising $500 million with the express purchase of buying bitcoin caused a dip before recovering. A single tweet reply by Elon Musk regarding the potential return to a use case that wasn’t widely adopted moved bitcoin 10% higher. A single reply had a far greater effect than 2+ days of bloviating by a group of lesser influencers and a major purchase by another heavily invested company.

For today at least, bitcoin holders are rightfully pleased. But it is clear that they are at the mercy of one man and his Twitter feed. Anyone who dabbles in cryptocurrency needs to be aware of what Elon Musk’s true motivations are at any given time.