The cryptocurrency industry is currently going through an unprecedented crisis after the bankruptcy of the FTX exchange.
Elon Musk is a crypto evangelist.
The billionaire is one of the most influential voices in the cryptocurrency market.
An announcement or comment from him about a digital currency can radically change the evolution of this asset. For those who follow the crypto market closely, they know that the billionaire is the main backer of meme coin Dogecoin (DOGE). If he withdraws his support for the cryptocurrency, DOGE would collapse as quickly as its price has soared.
DOGE, which features the image of the Shiba Inu dog as its logo and namesake, is the eighth digital currency in terms of market value, well ahead of cryptocurrencies linked to decentralized finance (DeFi) projects considered as the future of financial services.
Last July, Musk said he would personally continue to buy dogecoins despite the struggles of the crypto market which has lost over $2 trillion since its all-time high of $3 trillion set a year ago. At the time, Tesla had sold 75% of its bitcoins but the billionaire had said that he had no intention of selling DOGE.
Bitcoin, Ether and DOGE
While the cryptocurrency industry is shaken by the FTX scandal, Musk has just chosen the three digital currencies that he believes have a future.
FTX, the cryptocurrency exchange, was valued at $32 billion in February but had to file for Chapter 11 bankruptcy on November 11 because it ran out of cash. It turns out that FTX and its former CEO Sam Bankman-Fried, who had saved many crypto firms in the summer by bailing them out, used their clients’ money. They also concealed that they were in poor financial health.
It’s uncertain whether FTX investors and customers will ever get their money back.
The other issue is that FTX et Bankman-Fried are linked to more than twenty crypto projects and companies. Therefore, their debacle poses a huge danger to the entire crypto industry. Some experts compare FTX to the bank Lehman Brothers whose collapse caused the financial crisis of 2008.
It was in this context that Musk was asked about the future of cryptocurrencies during a Twitter Space on Nov. 13.
The new Twitter (TWTR) – Get Free Report owner and CEO of Tesla (TSLA) – Get Free Report told listeners that the FTX debacle was a signal that they should keep their digital currencies in cold wallets and not on exchanges.
“I would reaffirm that, if you have crypto, you should have it in a directly-accessible cold wallet. Not in an exchange,” the serial entrepreneur said. “That would be wise.”
While he has been highly critical of Bankman-Fried and FTX, Musk keeps faith in the crypto industry.
“I think there probably is a future for bitcoin, ethereum, and DOGE. I can’t really speak to the others. But if you’ve got one of those three in a cold wallet, and off an exchange, I think my guess is it works out well,” Musk said.
The billionaire also went after Bankman-Fried, whom he called “bullsh-t.”
“To be honest, I’d never heard of him,” Musk told listeners. “But then I got a ton of people telling me he’s got, you know, huge amounts of money that he wants to invest in the Twitter deal. And I talked to him for about half an hour. And I know my bullshit meter was redlining. It was like, this dude is bullshit – that was my impression.”
He continued: ” Then I was like, man, everyone including major investments – everyone was talking about him like he’s walking on water and has a zillion dollars. And that [was] not my impression … that dude is just – there’s something wrong, and he does not have capital, and he will not come through. That was my prediction.”