Crypto quant hedge fund CIO explains the impact of Elon Musk's tweets on the bitcoin market
May 25, 2021, 5:25PM EDT · 1 min read
Episode 28 of Season 3 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Cambrian Asset Management’s Martin Green.
Bakkt® unlocks the $1.2+ trillion of digital assets that is currently held in cryptocurrencies, rewards and loyalty points, gaming assets and merchant stored value. We began in 2018 with the vision to bring trust and transparency to digital assets. Through the Bakkt Warehouse and Bakkt Bitcoin Futures and Options contracts, we serve institutional clients in an end-to-end regulated market with true price transparency. For consumers, Bakkt aggregates digital assets to enable instant liquidity and to empower users to trade, transfer and pay however they want. Visit Bakkt.com for more information
Whether you’re an experienced crypto trader or just starting out, Kraken has the tools to help you achieve financial freedom. With 50+ cryptocurrencies to choose from, industry-leading security and a wide variety of features to suit any investing strategy, Kraken puts the power in your hands to buy, sell and trade digital assets. Visit Kraken.com to get started today.
Elon Musk's trigger-happy Twitter fingers have left the bitcoin world in a tizzy in recent days.
As the Wall Street Journal noted in a recent piece, Musk has become bitcoin's "biggest influencer" — much to the dismay of many evangelists. Since he first tweeted that Tesla would stop accepting bitcoin as payment because of environmental concerns, bitcoin has fallen about 40% from its all-time highs.
More recent tweets about Musk working with North American miners on addressing environmental concerns have pushed the crypto from lows near $30,000.
On this most recent episode of The Scoop, Martin Green, who leads quant investment firm Cambrian Asset Management, explained why Musk's tweets are having such an outsized impact on the crypto market. In Green's view, it's not so much Musk's tweets that matter but the environment into which he is tweeting.
"Often the news itself, like Elon's tweet, would have a different consequence in a different situation," he said. "You can light a match in the middle of my driveway... you can take that match and drop it on the floor in an open space. Monstrous difference in the consequences. Still the same match."
Green said that the crypto market has been primed to overreact to market news thanks to the amount of leverage in the system, which creates "a cascading of selling pressure."
The lack of institutional spot buying recently has added fuel to the fire.
Still, Green said there are a number of tailwinds for the industry. He said that there are macro forces that indicate that institutions are under-allocated to the crypto market, noting specifically that Ethereum is "quite under-owned."
© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.