Why the „Elon Musk“ effect number 2 could be much more noticeable this time around
Has Tesla’s bitcoin purchase changed the market dormancy? On-chain bitcoin analyst Willy Woo posted a tweet on 28 March showing a Glassnode chart of the average bitcoin quiet period. Musk effect #1, the effect of his tweet, is not present. However, the Bitcoin Revolution chart shows that bitcoin resting time shortened dramatically just before the Tesla purchase. Since then, it has lengthened again.
Roughly speaking, the Tesla purchase reset the dwell time to November levels before Bitcoin started breaking all-time high price records.
Musk effect #1
Elon Musk rose to fame in the cryptocurrency community in early 2020 as the tongue-in-cheek chairman of Dogecoin. However, towards the end of the year, more people started paying attention to his tweets.
The Musk effect was becoming noticeable. In early February 2021, Blockchain Research Labs conducted a study. It showed that some of Musk’s tweets seemed to cause abnormal changes in BTC and DOGE prices.
Then rumours emerged that the Securities and Exchange Commission in the US was interested in talking to him about his tweets and their impact on DOGE prices.
Musk did claim that an SEC investigation into his Dogecoin tweets would be „great“, but also changed his tone. Until mid-March, Musk’s crypto tweets had not moved crypto prices much.
Musk effect #2, part 1
On 8 February, Tesla announced a $1.5 billion purchase of Bitcoin
The market immediately responded with a double-digit spike above $40,000 and hasn’t gone below since.
Tesla’s stock also began tracking the bitcoin price. When Tesla announced the $1.5 billion purchase, it also promised that buying its products with Bitcoin might be possible in the future. The technology company, which makes motor vehicles, then made good on that promise on 24 March.
The tweet was posted thousands of times, but the effect on Tesla’s share price was negligible.
Musk Effect #2, Part 2
Willy Woo’s tweet raises an aspect of HODLing that is becoming more common as the price of bitcoin rises. As a mid-March analysis of bitcoin HODLing revealed, the current activity is different from the peak of the cycle in 2011, 2013 and 2017.
This could be a sign that there is still room for Bitcoin to grow in the short term. And as long as the quiet period remains above pre-Tesla levels, HODLers will obviously think so too.
