The Heat of the Moment: Bitcoin Slumps but Supporters Remain Fervent

Since its heavy decline in late May, Bitcoin has been trading sideways, staying tight in a consolidation between the $34,000 and $39,000 levels. This trend is difficult to read and no one knows which direction it may break toward. However, that does not mean there has been any less news on the famed cryptocurrency.  

Miami: CryptoTown  

This past weekend, on June 4th and 5th, the world’s largest Bitcoin- and crypto-related conference was held in downtown Miami. Powerful figures in the crypto-world were in attendance, including the Winklevoss Twins who cofounded the digital currency exchange Gemini, Bitcoin enthusiast and Twitter Inc. (TWIT) and Square Inc. (SQ) CEO Jack Dorsey, as well as various politicians. 

Several significant announcements were made that fueled the exuberant atmosphere. The President of El Salvador, Nayib Bukele, announced via video that his country will accept Bitcoin as legal tender. Miami mayor Francis Suarez came to stir up the crowd. Suarez had earlier publicized his intent to allow the Miami municipality to partially operate on Bitcoin and cryptocurrencies. Additionally, the CEO of MicroStrategy Inc. (MSTR) participated as one of the keynote speakers.  

Elon Musk, A Divisive Figure  

Throughout the conference, Elon Musk was a hot topic. After his May announcement that his company Tesla Inc. (TSLA) would no longer be accepting Bitcoin as a means of payment, he has fallen out of favor with crypto enthusiasts. 

Musk has been known to swing the price of Bitcoin and other cryptocurrencies with simple and vague tweets. During the hours of the Bitcoin 2021 conference in Miami, Musk tweeted the word #Bitcoin with a broken-heart emoji. Bitcoin’s price fell about $1,000 immediately thereafter, climbed back within 24 hours, and then fell once more to slightly lower levels.  

China Checkmate  

In stark contrast to these optimistic declarative positions, The People’s Republic of China had recently reiterated its opposition to Bitcoin and other crypto-related activity within its borders. 

These kinds of bold statements from the country which had mined almost three quarters of all existing Bitcoins wreaked wreckage on the cryptocurrency. They brought it down nearly 50% in late-May from its mid-April high of nearly $64,000. Bitcoin’s vulnerabilities as a currency and even a store of wealth have come into question as all its Chinese mining facilities must relocate or be forced to shutter.  

Balanced Scales

Bitcoin’s path to fulfill its prophesied status as the world’s future international currency is no stranger to obstacles. Central banks across the globe would rather retain a tight grip on their national economies, and a decentralized anonymous digital currency would never be adopted quickly or without issue. Yet, the crypto has continued on its march upward.

With each piece of negative media attention comes an equally monumental adoption or institutional investment to counter it. China bans all Bitcoin activity, and El Salvador wants to validate it as a national legal tender. Tesla drops Bitcoin as a means of payment for its electric vehicles, and the city of Miami is looking to pay its municipal workers’ salaries with it.

Likewise, the vulnerabilities exposed by Elon Musk’s tweets’ influence over the coin are only validated because investors react to them. Musk does not dictate Bitcoin’s policy or structure, and ultimately does not affect the crypto in any fundamental way, certainly not with emojis in late-night tweets. As Bitcoin’s saga moves into the second half of 2021, investors and observers can watch it with fascination.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell Bitcoin.