Social media websites like Reddit also caught onto the cryptocurrency trend, encouraging amateur investors to buy in, which pushed up the value.
Bitcoin was undeniably one of the hottest investments in 2021, with many celebs and influencers championing it. Social media websites like Reddit also caught onto the cryptocurrency trend, encouraging amateur investors to buy in, which pushed up the value.
Bitcoin’s value has risen 85% since January. In April, it continued to break records, reaching a peak of US$65,000.
Thanks to Bitcoin’s popularity, there are now an estimated 5,000 cryptocurrencies on the market.
In early April, Coinbase, a crypto marketplace, went public and was valued at US$85.7 billion. This just made cryptocurrencies more credible.
Research published in late 2019 by Charles Schwab showed that young investors are more likely to buy cryptocurrencies than they are to buy stock in The Walt Disney Company and Netflix, Inc.
According to a survey by Bankrate, millennials are also five times more likely than older generations to say that investing in Bitcoin is the best way to save for their futures.
What is Bitcoin’s impact on the environment?
Mining is when transactions on the blockchain are verified. Computers that are mining have to race to solve an extremely complex math problem in order to verify new transactions.
This helps to prevent hackers and others from abusing the system.
Solving these problems requires a tremendous amount of energy.
Mining for cryptocurrency currently uses more energy than the entire country of Sweden.
Sweden requires 130 terawatt-hours (TWh) compared to Bitcoin’s 150 TWh.
How did influencers help push Bitcoin into the mainstream?
Many believe cryptocurrency’s popularity is driven by social media.
In late January, Elon Musk, the chief executive officer of Tesla, added #bitcoin to his Twitter bio. This caused Bitcoin’s value to go up by 20%.
Tesla later purchased US$1.5 billion in Bitcoin and announced that it would accept Bitcoin as payment for the company’s vehicles and products.
On January 28, Musk tweeted a fake magazine cover called “Douge,” a dog-version of the fashion magazine Vogue. The tweet led to a 800% surge in dogecoin prices.
Celebrities like Snoop Dog and Gene Simmons also tweeted about doge, the meme and the cryptocurrency, leading to the surge.
Will influencers be the reason Bitcoin fails?
On May 12, Elon Musk tweeted a Tesla press release stating that the company would no longer accept Bitcoin for payment because it was concerned about the “increasing use of fossil fuels for Bitcoin mining and transactions.”
After the announcement, the price of Bitcoin dropped US$3,000 – a nearly 14% loss. Tesla stocks also took a hit, dropping 1.3%.
On May 8, Musk hosted Saturday Night Live and much of his dialogue revolved around cryptocurrency. When Musk was asked if dogecoin was a hustle, he replied, “Yeah, it’s a hustle.”
The very next day, Dogecoin had lost more than a third of its price, going from 65 cents a coin from before the show to 41 cents a coin after.
After Dogecoin’s value dropped 20% in a week, Musk tweeted about working with Dogecoin developers to improve their “transaction efficiency.”
This led to a 36% increase in the price of Dogecoins. That night, a single coin was worth 52 cents.
What do critics of amateur Bitcoin trading say?
Nigel Frith, Vice President at Catena Media PLC and the lead analyst for Ask Traders, told TMS that he is concerned by the effect media has on amateur traders. Compared to amateurs, professionals are “less likely to be influenced by the media and will have risk management in place.”
Jeff Hancock, the co-founder and CEO of Coinpass, a cryptocurrency exchange website and app, expressed similar views, stating that new users of crypto were “skipping the basics in investing, capital allocation and risk management … without fully knowing the risks.”
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