Updated: Jul 13
Elon Musk’s endorsement of bitcoin a month ago may seem like old news now, but it is going to have a ripple effect way into the future. As other financial big-name personalities have had flip-flop moments when it comes to bitcoin, the world’s richest man has been decisive and surgical in his endorsements and actions. When the Tesla CEO added the #hashtag Bitcoin to his Twitter bio, prices soared by as much as 20 percent. The recent BTC price slump may have put a damper on all that, but I believe a grand recovery is on the way.
Bitcoin then and Bitcoin now
The story of Bitcoin makes for an interesting read, but it also calls for a critical and analytical eye. Bitcoin and crypto haters almost always point to the BTC bubble of 2017 as they advance their dismissive agenda. This strategy works especially when crypto prices stumble as they have done recently. One thing has to be made clear though, BTC is not Dogecoin or GameStop. GameStop and Dogecoin are two Cinderella investments that will eventually turn into pumpkins like we are seeing already with the former. BTC has some substance to it and is worth all of our attention.
The 2017 BTC boom was unsustainable because the asset was missing some fundamentals that would justify its value. It was mostly crypto geeks and FOMO-addicted retail investors and developers that were jumping on it back then. Fast forward to 2021 and big asset managers like BlackRock and Skybridge are window shopping for it. In a space of four years, Bitcoin has gone from potential good player to rookie of the year and is now making a decent claim to that captaincy spot.
The Elon Musk Effect
While Bitcoin was still dividing opinion between traditionalists and digital investors, young and old, new school and old school, along came Elon Musk. After previous lukewarm utterances about crypto, the billionaire put it in black and white that he was all in on the crypto asset. You may not know much about the man who is trying to take us to Mars, but am sure you know his tweets alone are movers and shakers. This is why you probably cashed in very heavily soon after his endorsement and probably even way into the future.
Why Elon Musk’s endorsement matters so much
Elon didn’t just endorse Bitcoin by constructing a tweet. It was not a celebrity photo op; it was a tangible endorsement because he also made it known that Tesla had bought $1.5 billion worth of Bitcoin. On top of dedicating a huge chunk of its portfolio to Bitcoin, the company will look to accept BTC as a form of payment. Tesla’s pro-crypto moves will help to plug the holes that cynics like to poke as they dismiss the future of bitcoin.
The two main arguments made to justify the valuation of bitcoin are its scarcity and its potential to become a medium of exchange. Elon’s endorsement gave those arguments a big boost in one fell swoop. Taking $1.5 billion worth of Bitcoin off the market lends weight to the scarcity argument, and accepting BTC as a form of payment gives credence to the possibility of the asset becoming a mainstream medium of exchange. Do not forget Elon Musk’s public endorsement to his millions of followers serves to popularize the asset even more. That’s a hat trick of big wins for crypto right there.
What the future could look like
The aftermath of Elon’s endorsement in the long term could be one for the history books unless something very unexpected happens. Elon’s endorsement will most likely spark a migration towards crypto investment and utility like never before. The copycat syndrome is the reason this will happen. Let’s face it; we live in a world where most people don’t know who they are and where they truly stand on things. We have a few leaders and billions of followers. Elon is an economic leader with tons of clout across many disciplines.
People will follow his moves, even other high-value CEOs. Planting your flag next to Elon’s is something everyone will want to do. Firms will want to make similar moves like that of Elon’s firm because even if they end up wrong, few will fault them for being onboard with the richest man in the world.
I expect more institutional investment over time and even more BTC utility, as we go deeper into this decade. I also expect a squeeze in the availability of BTC tokens. I anticipate an even greater demand than supply and you know what that will mean for price.
Unless some regulatory meddling throws a spanner or two into the works, the BTC price can only rise and rise in the long term in my opinion. Bar Janet Yellen’s frequent outbursts against bitcoin, it remains in my eyes the most predictable cash machine in existence. There are very few assets out there that you can look at with certainty and say that their value will go up.
In many ways, BTC is like a young Tom Brady. After the frustrating false starts and failures at the Serra high school football team, he went on to become a young star playing at the highest level. Brady is now an unstoppable beast and that could just be Bitcoin’s future. Things could go bottom-up though, but that shouldn’t deter us. The uncertainty makes things even more interesting as time continues to tick.
Image courtesy of CTV News
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