If you have been holding Bitcoins, you need to read this and assess if you would like to take profit to protect your portfolio before re-entering again at a later stage.
Personally over the weekend, I have already taken my profits off the table before it fell 25% over the last few days. I will buy Bitcoin again once the price fall back to my target point. For the moment, I will wait patiently and monitor this cryptocurrency first. This is especially after what happen to Binance (see my other post on this).
So What Has Elon Musk Done That Is Impacting Bitcoin?
In my view, this is a good case study about how the value of major cryptocurrency could be manipulated. So it is a good idea to always stay alert to any market news.
To start off, let me go back in time and share how some old history.
8 February 2021
Elon Musk excited the world when he announced Tesla is buying $1.5 billion in Bitcoin and plans to accept it as payment. This drove the value of Bitcoin up by 15% in 1 single and subsequently skyrocketing the price up to a high of 64,918 from 37,105.
Reference: CNBC “Tesla buys $1.5 billion in bitcoin, plans to accept it as payment“
12 May 2021
In a surprise tweet, CEO Elon Musk updated Tesla has “suspended vehicle purchases using bitcoin,” out of concern over “rapidly increasing use of fossil fuels for bitcoin mining”. The price of bitcoin dropped about 5% in the first minutes after Musk’s announcement. Personally, I don’t find this explanation logical. It is more of an excuse of his exiting this after pushing the price up over the last 3 months and I suspect Elon Musk may be preparing to sell off for a very handsome profits so that he can invest in other areas.
13 May 2021
Within one day from his last tweet, Elon Musk tweets about dogecoin asking if Tesla should accept dogecoin as payment. About 80% of the nearly 4 million votes cast said “Yes”. The price of dogecoin skyrocket by around 20%. I also understand Elon Musk had partnered with dogecoin earlier on. So I would not be surprise if he has some vested interest in this.
Let’s step back and review a few facts:
1. Based on Coin Marketcap, Bitcoin market capitalization as of the time of this post is around $820 billion. So the size of Elon Musk’s crypto portfolio is less than 0.2% of that market cap. Hence the price movement observed in last few months is based on the emotional reaction from the market. Personally I will get out first and re-enter again at a later stage.
2. From the above sequence of events, it is important to stay alert and monitor such news so that quick actions can be taken to protect your cyptocurrency portfolio which is expected to have high volatility. Response speed is key. This is not a buy-and-forget asset class.
3. The impact on Bitcoin can be seen in the diagram below. It has been going down since his last tweet on 12 May 2021 and there is a possibility it might go back down to the level when Elon Musk first bought them back in 8 Feb 2021. So it would be good for traders to take note.
Here’s What Actions I Am Taking
Before I began, I would like to clarify this is not a call to trade nor an education. I am only sharing what I am doing. I have seen a few friends not closely tracking their portfolio and losing their profits. Hence, this post is more on sharing what is happening in the cryptocurrency market.
Ok now that is out of the way, below is what I am doing. Please do your own due diligence and assessment on what best suited your portfolio. I am doing the following:
1. I have taken profits off majority of my bitcoin portfolio over the weekend
2. I have shifted my outstanding bitcoin from Binance to other Exchanges. Please read my other post here for the reason why I feel this is necessary.
3. I will be monitoring the news and price movement of Bitcoin and may re-enter again once it hit my target price point
4. I will also be monitoring the news and price movement of Dogecoin and may enter a position if it turns favorable.
Ok, that’s it. Trade safe!