Last week’s piece focused on recent milestones reached by Ethereum and the wider crypto markets, along with the impact those milestones have had on price. This week, we’ll discuss the recent dip in the market and what to expect from here.
Weekend Selloff After Musk Tweets
After hitting an all-time high of $4,362.35 earlier this month, ETH slumped to the mid-$3000 range over the weekend. Tesla CEO Elon Musk issued a tweet on Wednesday declaring that the Tesla company would no longer accept Bitcoin as a form of payment over the weekend, leading to significant selloffs throughout the crypto markets.
“Tesla has suspended vehicle purchases using Bitcoin,” tweeted Musk. “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
Musk added that Tesla would not be selling any of its existing Bitcoin holdings. Morgan Creek co-founder Anthony Pompliano pointed out that 75% of Bitcoin miners use renewable energy, adding that the “energy story has been debunked over and over again.”
Many analysts, journalists, and commentators throughout cryptocurrency social media discussed the likelihood that Musk was simply trying to manipulate the cryptocurrency markets for personal gains, as evidenced with his previous comments on various cryptocurrencies in recent months.
Musk tweeted that he was working with Doge devs to improve Dogecoin, again sparking comments that he was likely manipulating the markets. Musk was charged with securities fraud in 2018 by the U.S. SEC for similar actions, taking to Twitter to falsely claim that new Tesla funding had been secured.
Buterin Dumps Dog Tokens, Burning Billions of Dollars
While Musk was pumping Doge price, Ethereum co-founder Vitalik Buterin was busy distancing himself from meme coins. Buterin recently became the world’s youngest known crypto billionaire due to the rise in ETH prices. It has also emerged that many dog-themed cryptocurrency teams have donated large sums to Buterin, likely as a PR move, with the rise in their value adding more billions to Buterin’s net worth.
However, Buterin was not interested in keeping his gifted dog tokens, burning $6.7 billion worth of SHIB and donating $1.5 billion worth of SHIB to India’s COVID-19 relief fund. He also donated $336 million worth of ELON and ETH to the Methuselah Foundation among other major donations.
It’s unclear whether the fund will be able to realize the true value of the donated coins due to fluctuating prices and limited liquidity. Buterin did not consent to receive any of the meme coins sent to his wallets, and stated that he was unwilling to become an influential figure in those communities.
In last week’s price action, there was yet another billionaire crypto influencer to consider — Facebook CEO Mark Zuckerberg revealed on Tuesday that he had named his pet goats Max and Bitcoin, leading to a mixed response from the community.
Many Bitcoin supporters felt that this meant a “Zuckerberg pump” was incoming, a wave of positive sentiment stemming from an announcement regarding a Facebook investment in Bitcoin. On the other hand, the reverse is possible — some pointed out that Twitter CEO Jack Dorsey revealed that Zuckerberg once killed a pet goat with a laser gun and served it to guests.
In that context, it’s possible that Zuckerberg aims to state that his new Libra token will “eat Bitcoin maximalists for dinner.”
In a turbulent market, sentiment is as important as ever. It’s worth noting that the Coinbase app reached #1 on the Apple App store in the U.S. on May 11, the day before Musk’s tweet about Bitcoin, indicating strong underlying sentiment in the crypto market despite the recent dip which brought Bitcoin down towards $44,000.
Tether also soothed some fears of further scandal last week by offering a breakdown of its finances for the first time since 2014, giving insight into the notoriously opaque architecture of the stablecoin. According to the report, 76% of Tether’s reserves are held in cash and cash equivalents.
If this information can be trusted, it means Tether is not under-collateralized and does not pose a threat to the stability of the market.
NFT Sales Continue at Christies
While all eyes were on the antics of major crypto influencers, adoption and network progress continued in the background.
Christie’s auction house sold a lot of 9 CryptoPunk NFTs for $17 million last Tuesday.
Noah Davies, head of digital sales for the famous auction house, dispelled rumors about difficult or halted verification processes for Christie’s ETH bidders on Monday, confirming that anyone can pay with ETH once it can be shown the money is not connected to criminal activity.
In other news, eBay announced on May 16 that it would be allowing the sale of NFTs on its platform, one of the largest e-commerce websites in the world. The announcement is a major step forward for the mainstream adoption of NFTs.
With increasingly strong fundamentals underlying the Ethereum network and no major changes beyond a price dip stemming from Musk’s Bitcoin crash, most analysts expect ETH to continue its upward momentum. The number of ETH addresses with over 10k ETH continued to grow last week.
Meanwhile, JP Morgan commented recently on the sustainability of ETH 2.0, saying “Ethereum 2.0 shifts from an energy intensive Proof-of-Work validation mechanism to a much less intensive Proof-of-Stake validation mechanism. As a result, less computational power and energy consumption are needed to maintain the ethereum network.”
The Blockchain in Banking virtual conference will be held on May 20, hosted by Black Arrow. The event will focus on topics such as the role of distributed ledger technology in the banking sector, KYC and fraud protection, and the future of finance. Speakers include representatives from the Dutch Blockchain Coalition, COMMERZBANK AG, Ripple, and Blockchain Alliance Europe.
The Blockchain Economy conference takes place on May 22 in Istanbul, Turkey. The event promises 3000+ attendees and 300+ c-suite executives from over 60 countries. Discussion will focus on ”the financial technologies of the future,” with networking opportunities for those present.
The speaker list includes Fundstrat managing partner Tom Lee, Blockchain.com co-founder Nicolas Cary, Bitpanda CEO Eric Demuth, along with representatives from OKEx, Ledger, and Crypto.com.