Brendan McDermid/Reuters/Piergiorgio Borgogno/YouTube
- Elon Musk should be more careful with his tweets on cryptocurrencies, according to Binance's CEO.
- "He has to realize that his tweets do have the power to move markets," Changpeng Zhao said.
- Many new retail investors tend to base their trading decisions on Musk's tweets.
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Elon Musk should be more careful about his tweets on cryptocurrencies, even though individuals are free to voice their opinions openly, Binance CEO Changpeng Zhao said in a Bloomberg interview on Wednesday.
"In a few countries in the world, there's freedom of speech and Elon lives in one of those countries, so he is, to a large extent free, to say what he wants to say," he said.
"I think Elon Musk wants to be a humorous guy… but he has to realize that his tweets do have the power to move markets," Zhao said, adding investors could get hurt by some of the wild swings in cryptocurrency prices.
The Tesla boss has managed to create quite a stir within the crypto market, as substantial price movements post his tweets continue to show just how nascent the asset class is. Tesla's $1.5 billion bitcoin bet and acceptance of it as payment boosted the digital asset by 16% back in February. Bitcoin ultimately hit a record above $63,000 in April.
But Musk's decision to suspend bitcoin payments led to a broad crypto-sell off last month as concerns around its mining process kicked off a debate on its environmental impact. The volatility hasn't been limited to bitcoin.
Dogecoin, one of the least stable cryptos on the market, has also been impacted by Musk's positive tweets about the meme-based token. Since many people associate dogecoin with Musk, new retail investors tend to base their decisions on his tweets. Galaxy Digital has published a chart that shows how dogecoin has reacted to Musk's tweets.
Because bitcoin is the dominant token in terms of the size of the market, the other cryptocurrencies tend to follow whatever it does.
Zhao said the crypto community must learn to properly respond to the tweets, and suggested Musk should be a bit more careful. "But it's his freedom. It's not me against him," he said. "I wouldn't recommend doing that but, you know, it's his freedom."
Billionaire Mike Novogratz also recently said Musk's often-eclectic tweets aren't good or helpful for cryptocurrencies.