CIO of Crypto Quant hedge fund explains impact of Elon Musk’s tweets on Bitcoin market

Episode 28 of Season 3 of The Scoop was recorded remotely with Frank Chaparro of The Block and Martin Green of Cambrian Asset Management.

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The trigger-happy Elon Musk’s Twitter fingers have left the bitcoin world in a state of mind in recent days.

As the Wall Street Journal noted in a recent article, 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 a form of payment due to environmental concerns, bitcoin has fallen about 40% from its all-time high.

More recent tweets about Musk working with North American miners to address environmental concerns have pushed crypto to lows near $ 30,000.

In this most recent episode of The Scoop, Martin Green, who heads quantitative investment firm Cambrian Asset Management, explained why Musk’s tweets have such a disproportionate impact on the crypto market. In Green’s opinion, it’s not so much Musk’s tweets that matter as the environment in which he tweets.

“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 alley … you can take that match and drop it on the floor in an open space. Monstrous difference in consequences. Still the same match.”

Green said the crypto market is prepared to overreact to market news with the amount of leverage in the system, which creates “a cascade of selling pressure.”

The lack of institutional cash purchases recently fueled the fire.

Still, Green said there were a number of favorable winds for the industry. He said there are macroeconomic forces that indicate institutions are under-allocated to the crypto market, specifically noting that Ethereum is “quite under-held.”

© 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.

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