Cryptos pump on another Musk tweet - but some urge caution

Cryptos are posting strong gains, with nearly every coin up by double digits this morning after Elon Musk moved markets once again.

Bitcoin jumped by US$2,000 in less than five minutes around 5.45am AEST, immediately after the eccentric billionaire tweeted he was working with North American Bitcoin miners to address energy consumption concerns.

Spoke with North American Bitcoin miners. They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising.

— Elon Musk (@elonmusk) May 24, 2021

Crypto markets had been recovering even before Musk’s intervention, with total crypto market capitalisation jumping by nearly half a trillion US dollars in the past 31 hours to reach US$1.72 trillion. It had fallen to a four-month low of US$1.24 trillion at the nadir of the crash at 3am AEST on Monday.

Polygon (MATIC) led gainers with a whopping 59 per cent rise, to US$1.83. Qtum, Yearn.Finance, Terra (LUNA), Ethereum Classic and Uniswap were also up more than 50 per cent in the past 24 hours.

At 11.40am AEST, Bitcoin was trading around $US38,800, up 10 per cent from 24 hours ago. But it had twice this morning run into resistance breaching US$40,000.

Ethereum was changing hands at over US$2,700 ($3,500), up 28 per cent.

Some were urging caution, given that a similar rally on Friday turned out to be a bull trap. Prices plunged to multi-month lows over the weekend after China announced a crackdown on cryptocurrency mining early Saturday.

After a 60%+ market crash, it’ll take more than a small bounce for me to shift bias back to bull market bullish.

Cautious until we capture $45,000 $BTC and $3400 $ETH.

Will be patient here. Don’t need to catch exact bottoms or sell exact tops to make money.

— Koroush AK (@KoroushAK) May 24, 2021

No top 300 coin had set an all-time high since THORChain did so last Wednesday, according to Coingolive. During the bull run multiple tokens were setting all-time highs daily.

Bitcoin Mining Council

Michael Saylor, chief executive of Microstrategy (NASDAQ:MSTR), the S&P600 company that’s accumulated over US$1 billion in Bitcoin, added a few details to Musk’s tweet a few minutes later.

Execs from @ArgoBlockchain , @blockcap, @Core_Scientific, @GalaxyDigitalHQ, @HiveBlockchain, @hut8mining, @MarathonDH & @RiotBlockchain were present & decided to establish an organization to standardize energy reporting, pursue industry ESG goals, & educate+grow the marketplace.

— Michael Saylor (@michael_saylor) May 24, 2021

Bitcoin mining is famously energy-intensive, consuming an estimated 121 terrawatt hours (TWh) of energy each year, about as much as the Netherlands. Crypto proponents claim that much of that is from renewable sources, although reliable figures are hard to come by.

But a coordinated “mining council” has the potential to be controversial, with some arguing it invites collusion between miners and runs counter to the decentralised ethos of cryptocurrency.

Bitcoin mining council

Sounds great guys! Good luck with your decentralized currency! #Bitcoin

— Based LeMahieu (@BasedLeMahieu) May 24, 2021

Consensus conference begins

Meanwhile the global Consensus crypto conference began overnight, with hedge fund billionaire and keynote speaker Ray Dalio declaring he owns “some” Bitcoin and prefers it to bonds as a hedge against looming inflation.

He said monetary inflation is good for assets like real estate, stocks and cryptocurrencies, but only to a point.

“As those prices rise – like a bond – their future expected returns go down,” he said. “As they come closer to the interest rate … then there’s no longer the incentive to buy those things. And you could have trouble. It becomes very difficult to tighten monetary policy, because the whole thing falls apart. Everything’s interest rate-sensitive.”

That could lead to more money printing by central banks, he predicted.

Dalio is the founder of Bridgewater Associates, the world’s largest hedge fund, with US$101.9 billion in assets under management at the start of the year.

Organised by crypto media company Coindesk, the conference is entirely virtual this year.

In past years the conference – perhaps the biggest event in the crypto space – has been associated with price rallies, possibly because crypto developers save their big announcements for the event.

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