Controversially volatile cryptocurrency bitcoin rocketed by approximately 20 percent today, apparently influenced by Elon Musk adding the #bitcoin hashtag to his Twitter bio. The price of the flagship crypto has levelled out since the 9.30am GMT jump, and is currently trading at $36,725 (£26,759) as of 5pm GMT, according to CoinDesk.com data.
SpaceX head Elon Musk reportedly added #bitcoin to his Twitter biography earlier Friday morning.
This was swiftly followed up with a cryptic tweet, gnomically stating: “In retrospect, it was inevitable.”
Elon Musk’s unexpected intervention into the cryptosphere has added to the wild volatility in markets in the latter part of this week.
This saw the stock prices of heavily-shorted companies such as GameStop surge dramatically.
Marcus Swanepoel, CEO of Luno, has revealed why amateurs, apparently inspired by Reddit forum WallStreetBets, rushed to invest.
However, he added how despite this tactic being common, it is a “high-risk move” because this involves counting on later buying cheaper replacements.
Mr Swanepoel said: “Members of the Reddit sub-group, Wall Street Bets, took advantage of the trend by orchestrating a short-squeeze, i.e they noticed that the hedge fund, Malvern Capital were short-selling GameStop stock and grouped together to buy as much of it as possible, causing the price to shoot up and catch the hedge fund in a short-squeeze where they lost billions.
“Individuals coming together in this way is a pretty new phenomenon and a reminder of the power of community.
“It’s certainly added an element of volatility to traditional shares. As with concerns about crypto volatility, regulators may have concerns with influential occurrences like this one spiking the price of traditional shares.
“It does go to show that crypto is not the only industry where volatility is a factor, and I believe we will see many more occurrences of this sort as individual traders learn their potential to influence the market in playful, and frankly rather innovative ways.”
Nicholas Pelecanos, Head of Trading at NEM believe this week’s event revolving around GameStop may prove seismic.
He said: ”What has played out on Reddit with r/wsb in the last few days will be viewed in history books as an unintentional start to a financial rebellion.
“Where, in the place of large hedge funds colluding in secret to short a business down to zero or short squeeze another fund, thousands of day traders are openly targeting and short squeezing hedge funds.”
Eric Kapfhammer, COO of Polyient, believes Elon Mus’s involvement has proved as pivotal – in the very short term at least – as the saga surrounding GameStock.
He told Express.co.uk: “The recent events surrounding the GameStop saga have been depicted as a David vs. Goliath scenario, playing out in real-time in today’s financial markets.
“I believe this viewpoint oversimplifies what is truly transpiring, as what we are really witnessing is the exposure of several fundamental flaws in the traditional financial system that facilitates the markets.
“As these flaws come to the fore, we can contrast them with the same functionality that has been designed in the decentralised, blockchain world.
“Elon Musk is definitely an influential character in society and the markets.
“When someone of his stature shines a light on a topic such as cryptocurrencies, the impact can be meaningful and rapid. I believe Musk has done the blockchain space an immense favour recently, and his engagement will have a large impact on the mainstreaming of crypto.
And Luis Cuende, Founder of Aragon, appeared to agree, telling Express.co.uk: “The recent developments with GameStop and Robinhood effectively censoring traders is a turning point for the trust in the traditional financial system.
“The 2008 crisis left many deeply unhappy with the insane corruption and lack of transparency of the system, but there was no real alternative.
“Many political movements started, but the truth is that no one had a compelling, simple narrative to improve the financial system. Bitcoin was born out of that crisis.
“Many people are now realising the potential of such a system, where we don’t need these crooked institutions and corrupt politicians using their power against their citizens.
“Elon Musk, the world’s number one innovator right now, has awakened to it as well.
“It’s a perfect storm. Change happens slowly, then all at once. We will see our financial system being completely rebuilt during the next few years.”
In related news, another subreddit group, SatoshiStreetBets, led investors to pump up the price of Dogecoin, with the altcoin witnessing growth approaching 800 percent in 24 hours alone at one point.