- Elon Musk has criticized Robinhood of manipulating the markets while single-handedly moving the Dogecoin and Bitcoin prices
- Musk has acknowledged his impact on the crypto market and yet continues to do tweet about coins
- The moves are fun for a while, but they equate to nothing more than a one-man pump and dump
Elon Musk was a vocal critic of trading app Robinhood and their bowing to Wall Street hedge funds in the wake of the GameStop affair, but his cries of manipulation ring hollow given his simultaneous manipulation of the crypto markets. Following his Twitter bio change that sent Bitcoin soaring $6,000 ten days ago, Musk has been firing out tweets about DOGE like there’s no tomorrow, days after acknowledging that his tweets affect the market. After urging traditional stock traders to move to crypto, can we really say that it’s any better in terms of manipulation?
Musk Single-handedly Liquidated Traders
In a fortnight where market manipulation has stolen the news agenda, Elon Musk’s persistent tweeting about DOGE takes on a less comic meaning. Musk has tweeted about DOGE in the past, joking that it was “inevitable” that the ‘dogecoin standard’ would overrun the global financial system. He has ratcheted up the tweets in 2021 however, including a flurry this week during which he called it “the people’s crypto” among a plethora of other tweets sent in a short space of time.
The result has seen DOGE fluctuating wildly, with price swings that would be too much for a seasoned crypto trader:
It isn’t just ‘small’ coins like DOGE that have felt the Musk effect. Bitcoin, the biggest of them all, jumped $6,000 recently after Musk changed his bio to the Bitcoin logo and tweeted that “in retrospect, it was inevitable”. Musk stated in a recent appearance on Clubhouse that he is aware that his tweets move markets, so what do we put his recent DOGE flurry, which continued yesterday, down to? Is it a joke, a way for the richest man in the world to alleviate the boredom of a trip to the toilet? Or does he know exactly what he’s doing?
Manipulation Claims Ring Hollow
The irony of all this is that when the likes of Robinhood halted buy orders for AMC and GME in order to placate the hedge funds that were in danger of losing heavier with every passing day, many pointed to crypto as an environment free from such manipulation and corruption.
However, Musk’s tweets and the reactions to them shoots bullets through this argument – after all, how can a market claim to be free from manipulation when the world’s richest man can move a $735 billion asset with just one tweet? There will have been plenty of traders who were legitimately short on Bitcoin last week, only for one man to change his Twitter bio and get them liquidated. Of course there is inherent risk in leverage trading, but if the GameStop affair was a case of David versus Goliath, then how do we parse Musk’s actions – the puppet master and Pinocchio?
Tesla Chief Playing God?
Musk seems to revel in his manipulation of the markets, which only makes it more worrying. Of course if he helps pump your coin then you’re not going to complain, but in the crypto markets when one man gains another loses, which isn’t fair if it is down to the whims of one individual playing God. Perhaps traders are better off staying on traditional markets after all. At least there one man can’t get you liquidated with a tweet.