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Elon Musk’s tweets control Bitcoin’s destiny

The price of bitcoin climbed to US$57,000 on Friday, giving it a total value of more than US$1 trillion, and it has continued rising at the weekend.

Tesla, Elon Musk, Bitcoin

Elon Musk, the CEO of Tesla and Founder and CEO of SpaceX and Neuralink, appears to have the future of cryptocurrency bitcoin in his hands.

Musk, who also has a baby with Canadian singer Grimes to occupy his time, appears to love sharing his thoughts on his Twitter handle, where he has 47.6 million followers.

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The price of bitcoin climbed to US$57,000 on Friday, giving it a total value of more than US$1 trillion, while ethereum, the second-largest cryptocurrency, broke US$2,000 per ether token for the first time, giving it a total value of US$226 billion.

Bitcoin continued gaining on Sunday, rising to a record US$58,354, taking its weekly gain to around 20 per cent. It has surged around 100 per cent this year.

The latest surge in the value of bitcoin came after Tesla informed the Securities and Exchange Commission that it had added US$1.5 billion in bitcoin to its balance sheet. The electric vehicle company also said it expected to start accepting bitcoin as payment for its models.

Tesla was far from the first company to invest substantially in bitcoin but Musk’s tweets and Tesla’s action drove bitcoin to a record high. Tesla is one of the biggest companies in the world on market capitalisation.

Musk sought to distance himself from Tesla’s US$1.5 billion worth of bitcoin. “Tesla’s action is not directly reflective of my opinion,” Musk said via Twitter in response to a Bloomberg interview with Changpeng Zhao, CEO of bitcoin and cryptocurrency exchange Binance. “Having some bitcoin, which is simply a less dumb form of liquidity than cash, is adventurous enough for an S&P 500 company … When fiat currency has negative real interest, only a fool wouldn’t look elsewhere. Bitcoin is almost as bs as fiat money. The key word is ‘almost’.”

Nicholas Pelecanos, Head of Trading at blockchain network NEM, told Forbes, “There are a number of reasons why bitcoin is soaring, but what stands out most is the trend that MicroStrategy started and Tesla popularised: moving institutional balance sheets into bitcoin to hedge against inflation,” .

Now Musk has warned the price of bitcoin and ethereum “do seem high”.

Musk made the bitcoin and ethereum price warning during a discussion on Twitter about the nature of money. Replying to gold investor and bitcoin skeptic Peter Schiff, Musk said: “Money is just data that allows us to avoid the inconvenience of barter. That data, like all data, is subject to latency and error. The system will evolve to that which minimises both. That said, bitcoin and ethereum do seem high.”

Fellow billionaire Bill Gates, promoting his new book, told CNBC on Thursday: “I don’t own bitcoin, I’m not short bitcoin … I’ve taken a neutral view,” he said.

“Bitcoin can go up and down just based on the mania or whatever the views are, and I don’t have a way of predicting how that will progress.”

Gates added that the Bill and Melinda Gates Foundation was working on “moving money into a more digital form and getting transaction costs down” in developing countries.

“But there we do it so you can reverse the transactions, so you can have total visibility of who’s doing what … it’s not about tax avoidance or illegal activity.”

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