Billionaire CEO of SpaceX and Tesla, Elon Musk recently affirmed a tweet by the co-founder of Dogecoin, Billy Markus. Markus opined that following the prices of various cryptocurrencies could “cause mental health issues.” Musk replied that the assertion was 100% correct.
The interaction intimates the world’s richest man may have been actively paying attention to the crypto market prices. His recent bent also points to the fact that he is long on the assets he holds and does not plan to sell anytime soon.
Musk, who is an outspoken supporter of crypto, has disclosed that he owns Bitcoin, Ethereum, and Dogecoin – which he continues to express a strong affinity for. The exact amount of these crypto-assets are not known, but the billionaire has hinted that his most significant personal investment after his shares in Tesla and SpaceX were Bitcoin followed by Ethereum and Dogecoin, which is why he is personally concerned if prices tumble.
Significantly, Musk and Markus’ stance on the crypto-market is a sentiment shared by a lot of key players and market participants. It is common information in the crypto space for traders and investors to take a break from monitoring the prices in the crypto market and also discard the idea of making a “quick buck” and instead be fixated on the long-term theory and not invest what they can’t afford to lose. This is because the market is extremely volatile; gains can be made and wiped out in a matter of minutes, days or months, though, over the long term, unflappable hodlers have been mostly rewarded.
Bitcoin, the leading crypto, has been implicated for this repeatedly as data shows that it has had very high volatility throughout its existence. According to a Forbes report in June, Bitcoin reached a 14 month high as annualized 30-day volatility rose to 117.04%. It is a similar story for other crypto assets as well.
However, over the long term, Bitcoin has shown itself to be able to sustain gains. Year to date, it is up over 130% and some 1 million percent in the last 10 years as it has repeatedly bounced back from slumps, showing itself to be highly resilient to attacks and bad headlines.
One major factor that contributes to volatility aside from negative actions taken against the network by regulators and governments has also been derivatives market liquidations. When massive liquidations – which is any transaction that offsets or closes out a long or short futures position – occur, the price of the market is usually affected significantly by the shakeout.
The most recent massive liquidation that occurred caused Bitcoin to fall 4.5% to trade at around $59,000 and Ethereum as well to slip below $4,000 as noted by crypto pundit Colin Wu, who noted on Wednesday that in one hour, crypto-market liquidations exceeded $500 million.