Bitcoin just dropped 20% in less than 24 hours, proving once again that it cannot function as money. As I write this, the price is about $50000, up 8% from its bottom at $46000 a few hours ago, indicating that support was found at the neckline of the developing head and shoulder pattern. It remains to be seen if this support breaks as I've predicted, but the odds for this happening are substantially greater now than a day ago, because Elon Musk has once again chimed in with his views, and they were not good.
Elon announced late last month that he had sold all his Bitcoins. Two weeks later, he warned people against putting too much money into crypto-currencies, and yesterday he announced a reversal of an earlier decision. He and his companies will not accept Bitcoin as payment for any of their products or services. The reason being that Bitcoin consumes energy for its mere existence. Bitcoin is not green enough to be part of Elon's strategy. The market reacted to this latest announcement by chopping 20% off of Bitcoin's price, as we've just seen.
This has several interesting aspects to it. One being that the market is far from efficient. It's a well known fact that Bitcoin isn't green technology. Furthermore, Elon warned us twice before slamming Bitcoin. First he told us he sold his Bitcoin, and then he told us to reduce exposure. Yet, the price didn't drop substantially before Elon came out and told us in plain text that Bitcoin isn't money, and will never be money, as if that's a new insight.
Another thing to note is how Elon appears to speak on behalf of someone else. Why else this shift in sentiment? What we're eying is the Faustian deal struck between Elon and the state. Elon gets to do all sorts of things without punishment as long as he acts in the overall interest of the state, and one of the most important facets of the state is its monopoly power to create money out of thin air.
Crypto-currencies compete with the state in the fiat currency business, and must therefore be crushed. Extreme pain must be inflicted on those who have had the audacity to choose crypto-currencies over state issued currencies, and the best way to do this is to create a pump and dump scam that benefits a small elite at the expense of a large number of unwitting speculators. Elon and his buddies were therefore allowed to pump Bitcoin and other crypto-currencies. They were then told to get out of these things.
Being dependent on green subsidies from the state, Elon had no choice but to make his latest announcement. Without this announcement, Elon would be denied his subsidies, and he would be broke. The state whispered and Elon spoke. That's the nature of the beast. That's the Faustian deal that Elon has struck with the state.
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