Will Elon Musk Make or Break Bitcoin's Bull Case? BTC is down, but not out

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Here's what I think the dominant cryptocurrency will look like in the future.

Bitcoin and other cryptocurrencies have been all over the place recently. Bitcoin has struggled to rally since mid-April, when Coinbase went public.

In reality, Bitcoin reached a high of almost $65,000 that day and has since struggled. We've seen some significant rallies, but those gains have been eclipsed by significant losses. From peak to trough, the cryptocurrency dropped by about 52%. Bitcoin is currently down nearly 40% from its all-time high on April 14.

Of course, just because it's difficult to picture a future without cryptocurrencies at this stage doesn't mean the volatility won't continue. It also does not imply that we have not experienced the lowest point. This is especially true given the quantity of stories – and tweets – that continue to influence the market.

The Elon Musk Factor in Bitcoin

Elon Musk, CEO of Tesla, has been a major mover and shaker in the cryptocurrency markets. That has sometimes meant moves for Dogecoin and other times it has signified changes for Bitcoin. For the latter, Musk announced in February that Tesla would begin taking Bitcoin payments, while also purchasing $1.5 billion of the cryptocurrency.

Unsurprisingly, this resulted in a significant rally for bitcoin. It also helped that Microstrategy and Square were also large buys. PayPal has lately made it easier for its users to buy and sell certain cryptos.

However, with Musk and his 57 million Twitter followers, he appears to have the most clout in moving these markets. For example, when he and Tesla changed course a few weeks later and declared the automaker would no longer accept Bitcoin payments due to the cryptocurrency's environmental impact, BTC was not pleased.

“We are concerned about the fast expanding use of fossil fuels, particularly coal, for Bitcoin mining and transactions Tesla will not be selling Bitcoin, and we expect to use it for transactions after mining shifts to more sustainable energy sources.”

As a result, Bitcoin fell 13% in a single day. Another of Musk's tweets on June 13 undoubtedly contributed to the crypto's rise, as it gained about 10% on the day.

Now, I'm not suggesting Musk's influence is correct or incorrect in this case. Rather, I'm pointing out that, depending on the context, CEO tweets can be either tailwinds or headwinds. And we don't want an entire asset that swoons (up or down) solely on the tweets of a single person. I'm sure he'd rip if he stated Tesla will accept Ethereum. That demonstrates his potential power.

How Long Can Bitcoin Survive?

Bitcoin is attracting the attention of an increasing number of businesses. That is true whether it is mined, bought and sold, or held on the balance sheet. With billions of dollars circulating at low interest rates and inflation on the rise, it's difficult to blame firms for allocating a modest fraction of their present assets to this space.

Countries, on the other hand, are now joining in on the fun. El Salvador, for example, recently announced that anyone holding at least three Bitcoins — presently worth approximately $119,000 — would be granted citizenship. More crucially, Bitcoin has been designated as "legal cash" in the country.

While El Salvador is not renowned as an economic powerhouse, this move demonstrates how long-lasting bitcoins may be as investments. If more countries follow suit, demand for Bitcoin, Ethereum, and other cryptocurrencies will skyrocket.

Despite the fact that the crypto industry is in a bear market, I recently discussed some of the drivers for Ethereum. Using Ethereum as a store of value was one of those drivers. I also favour Bitcoin as a store of value, despite the fact that it is the most well-known cryptocurrency in the world.

Furthermore, while the Internal Revenue Service (IRS) recently asked Congress for authority to impose stricter crypto laws functioned as a negative catalyst (as most news does in a bad market), I believe it is a good thing. The IRS is not requesting the abolition of cryptocurrency. Neither is Congress, nor the Securities and Exchange Commission of the United States (SEC). Rather, the IRS's action appears to provide credibility to Bitcoin and others rather than detract from them.

Without a doubt, BTC will face additional stumbling blocks in the future. Nonetheless, this asset does not appear to be going anywhere.

Where Does Bitcoin Go From Here?

To be honest, Bitcoin has been in a bear market for quite some time. However, it was an excellent trading vehicle at the time. In fact, I previously warned that it was vulnerable to a decline.

That drop pushed it down to $31,000, a key support level. But, as I previously stated, it is not yet out of the woods since it must overcome short-term resistance. Bitcoin is doing precisely that, while rotating through several weeks' worth of highs, offsetting the recent lower-high pattern...
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