What really happened Wednesday to cause the Dip…

Bear with me, this will be wordy.

TLDR: Elon's tweet did not entirely cause the Crypto Dip this week. Not even close. Economic news did. Elon's tweet MAY have been the tipping point but not the cause.

Fire up the Way Back machine!

The dip Wednesday of this week was not caused by a tweet. No matter who made it. It was caused by two major economic news items and probably the geopolitical news as well. Elon's tweet was a catalyst, to be sure, but it was not the driving force behind the depth and breadth of the crash that far too many people are giving it credit for. Seriously… The dip would have happened whether Elon tweeted or not. Keep in mind that the Stock market went down too, not just crypto.

So… Let's look back at the week. This week there was a major ransomware attack on the Pipeline transporting fuel to the Eastern Seaboard of the US from the refineries in Texas. This news caused uncertainty and nervousness in all markets. Especially the Stock Market and, by extension, Institutional money. But it didn't cause a downturn by itself, or right away. Until Tuesday evening it was more interesting than concerning as there wasn't any real impact yet. But, after the news cycle on Tuesday, gas stations started running out of gas. But it wasn't HUGE news yet, that happened Wednesday.

So on Wednesday's news cycle the news that the entire east coast was running out of gas in the gas stations started getting widespread attention and TV pundits started prognosticating about how horrible things would get if the pipeline outage went on for several more days (even though they already knew it was in the process of coming back online and would be fully online Thursday evening). So institutional money started getting nervous…

Now for the catalyst: The Inflation Report for the US Economy came out… Wednesday afternoon… and, thus, during the news cycle starting at 6pm Eastern Time Wednesday, the Inflation numbers got widespread attention. They were MUCH higher than expected at over 4%, which is the highest they've been in over 12 years. Now, let's go look at the charts and see when the dip started…. yep…. 6pm… right around the time the main news cycle hit. Edit: Someone in the comments also pointed out that Israel and Palestine started tossing rockets at each other about this time as well.

So what really caused the crash wasn't a tweet. What caused the crash was tons of investors pulling profits and de-leveraging themselves due to economic (and geopolitical) news causing major uncertainty. Honestly I'm surprised the dip wasn't bigger.

But it wasn't because Elon tweeted. He just timed his tweet really, really, well to grab attention to himself and his company. It was likely a tipping point but it wasn't the entire cause.

I don't really believe he thought his tweet would cause a crypto crash. I think that tweet was a PR stunt… I'll get into that in a different post if folks want to dive into it.

Hope this is informative/helpful. I just feel like people are giving WAY too much credit to Elon's tweeting power. Sure he's influential and can have impact but he's not all powerful. I think he's both good and bad for crypto. On one hand he brings a lot of attention, and thus new money, to it. On the other, he really enjoys being disruptive so often causes chaos and uncertainty. But he wasn't the cause of this dip. He just played a REALLY well timed PR stunt.

^{Credit where it's due: A fellow redditor reminded me about the inflation numbers coming out wednesday in conjunction with the TV coverage of the "Gas Shortage".}