Elon Musk tweeted on Feb 20, 2021, “Money is just data that allows us to avoid the inconvenience of barter. That data, like all data, is subject to latency & error. The system will evolve to that which minimizes both. That said, BTC & ETH do seem high lol”.

While a myriad of factors likely play into the drop in BTC and other cryptocurrencies’ prices, Elon Musk’s impact on BTC can not be ignored. On the one hand, he believes in bitcoin’s future. Tesla did buy $1.5 billion dollars worth of bitcoin. On the other hand, short-term volatility on cryptocurrencies happens constantly, creating market inefficiencies.

BTC dropped 19% in 16 hours today from $58,414 to $47,393. Part of this drop can be attributed to Elon Musk. Another factor is the forced liquidations on many exchanges, according to tracker Bybt.com. About $3.52 billion of cryptocurrency were liquidated in the past 12 hours. 

Traders sometimes overleverage their...