Not a lot of people would imagine at least two years ago that the crypto-industry would be so actively discussed and talked about in our everyday lives. After observing the recent events we can say that there were at least two major factors that had an influence on the increased popularity of cryptocurrencies. First and foremost, one of the driving forces appeared to be the global covid pandemic. It forced people to stay at home and this is when we were stuck in one place and had plenty of time to adapt and become aware of new things. one of them appeared to be cryptocurrencies as they were also offering a new source of income as many of them lost the source of income due to the economic crisis. The second factor was a very active PR campaign for the crypto-industry and a lot of influential people were making pro-crypto announcements, most importantly, Elon Musk, whose even Twitts had the great influence in terms of increasing demand on the market. Sometimes it is called Elon Candle Effect.
Elon Candle Effect
In late January and February, Elon Musk was very active in terms of making comments on cryptocurrencies. While people did not have the idea what kind of attitude to have towards virtual currencies, appeared that those comments that were made by one of the richest people in the world, to be quite assuring.
To follow the timeline of its comments was, that first Elon Started with that in the future people will be using bitcoin on mars and surprisingly or not, people received it as a massage for the future use of bitcoin as it would be a valuable asset in the future. Then it was followed by the announcement that he was going to implement bitcoin as a payment method for his company “Tesla” and people would be given the opportunity to buy cars only by buying bitcoins. This was the major tipping point that increased the demand for bitcoin dramatically and hit its historical maximum. This is why the experts call it Elon Candle Effect, as it had a positive impact on the price uprise.
However, the story does not stop here, after the rapid price surge, Elon made a comment once again, now stating that the price uprise was very quick and rapid. It caused a decline and a lot of people sold their shares of bitcoin, and as well as in recent years, bitcoin still stays to be very volatile.
Other than that, bitcoin’s volatility is often caused by the different regulations from different countries. If the US law gives the opportunity to implement it as a payment method, it also hinders the possibility of spreading it on various other fields, more specifically, the online gambling sector, even though it is one of the most active entertainment industries not only in the US but in the whole world. Bitcoin gambling for US citizens is restricted and is allowed only in several states, even though it is not prohibited by the federal government. Many other states are working on adapting laws that would be adjusted to their own reality in terms of online gambling with bitcoin, but the majority of them still have very strict regulations on it.
Paying with Bitcoin – risk evaluation
As of today, people are already able to pay for their cars with bitcoin if they want to buy tesla. However, here is a question of whether it is safe or not. Well, it depends on what happens with bitcoin’s price and everyone would agree that it is quite difficult to predict in any circumstances.
The rapid uprise of bitcoin prise might cause a great deal for some buyers, but it still depends on timing. If you had bought one bitcoin in September, you could buy Hyundai at that price, but today you can buy the latest model by Tesla. It is not official yet, what will be the regulations from Tesla in case of bitcoin payments, as they have not announced their bitcoin pricing plans.
“The firm cannot accept $35,000 for a Model 3 today and then $29,000 tomorrow, it is just not good business,” said Danyaal Rashid, head of thematic research at GlobalData. Other companies that were accepting bitcoin as payment, had implemented special Bitpay that converts bitcoin into dollars and this is how the payment was made. In this case, the company was not losing anything due to the price volatility.
Finally, to sum up, it is vivid that bitcoin is making a revolution in many fields but its volatility is hindering the process in many cases. Some people were expecting that the implementation of bitcoin as a payment method in Tesla would make its price more or less steady, but it started to drop recently again, and many experts evaluate the process as the fading of Elon Candle effect. The main reason for it is that there is no agreed opinion on what can bitcoin be used for and what is its official purpose, but it is expected to change and is just a matter of several years.