Roaring crypto cacophony drowns out rest of Wall Street in a wild week

Wild stock swings, spikes in Treasury yields, startling economic readings? Interesting, sure. But if you really want to get people’s attention right now, you need to tell them a story about crypto.

And there have been a lot of those. Even for a market that’s famous for its wild volatility and gimmicks, the past week’s cryptocurrency news set new records for jaw-droppers.

It began with Elon Musk’s highly anticipated appearance as host on “Saturday Night Live.” Dogecoin owners watched hoping that the “Dogefather” would further propel the digital currency that had soared this year from less than a penny to 74 cents before he took the stage.

What they got instead was a skit in which he laughed after calling the coin a “hustle.” Since then, the Shiba Inu-branded coin created as a joke has lost almost half of its value.

Dogecoin wasn’t the only canine-themed coin to take a tumble.

Shiba Inu coin -- yes, a meta joke about the joke that is Dogecoin -- soared earlier in the week as it was added to exchanges like OKEx and Binance. It and other Dogecoin imitators’ popularity reached such heights that transaction fees on the Ethereum network hit an all-time high, according to CoinDesk.

Some have voiced concerns about $SHIB listing. We follow users. There is a large number of users demanding it, to the point where we ran out of ETH deposit addresses due to SHIB today. Never happened before for any other ERC20 coin.

 

Not endorsing it. Super high risk. NFA.

 

— CZ Binance (@cz_binance) May 10, 2021

The rally faded quickly. The cryptocurrency plunged Wednesday after the Wall Street Journal reported that Ethereum creator Vitalik Buterin donated more than $1 billion of the coin to a charity that is fighting the spread of Covid-19 in India.

Then that night, Musk struck again. He announced that Tesla Inc. would no longer accept Bitcoin as a form of payment for its cars. In a tweet, Musk said that the carmaker was “concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”

While his tweet left Bitcoin holders wondering what spurred the change -- the facts of the coin’s energy profile hadn’t changed since Tesla announced in March that it would accept it as payment -- the market reacted swiftly. Bitcoin plunged from nearly $57,000 before his flip-flop to $46,000 within two hours.

So Elon never really understood #bitcoin, never understood proof-of-work. His Doge pump was a warning sign. His turning to other "crypto" is confirmation. No more Tesla for me. https://t.co/wPzE3eEF68

 

— PlanB (@100trillionUSD) May 12, 2021

Thursday brought some good news for crypto die-hards. Point72, the hedge fund run by billionaire New York Mets owner Steve Cohen, was set to make a sizable move into the market. Bitcoin gained 2.5% following the news.

The rally didn’t last long.

Tether, the crypto stablecoin that says it’s backed one-for-one by fiat currencies, released a reserves breakdown for the first time that showed a large portion in unspecified commercial paper. The company has faced questions over both its reserves and whether it was used to manipulate cryptocurrency prices. In February, Tether settled a legal dispute with the New York Attorney General’s Office and paid a fine of $18.5 million.

After that, reports surfaced that Colonial Pipeline Co. paid nearly $5 million in untraceable cryptocurrency to the hackers that infiltrated the company’s network and forced the shutdown of its infrastructure, setting off widespread gasoline shortages up the U.S. eastern seaboard.

At about the same time, Bloomberg reported that Binance Holdings Ltd., the world’s biggest cryptocurrency exchange, was under investigation by the Justice Department and Internal Revenue Service in relation to possible money-laundering and tax offenses.

News of the investigation sent Bitcoin and Ethereum, the two largest cryptocurrencies, down by more than 7% each as fears were stoked about the Biden administration taking a tougher approach toward an industry that has largely operated outside of the gaze of regulators.

Then at 4:00 p.m. New York time, Coinbase Global, Inc., the biggest U.S. crypto exchange, reported first-quarter earnings. Its revenues fell just short of consensus estimates and the company projected flat user growth. Coinbase also plans to offer Dogecoin trading on its platform. The exchange’s shares fell as much as 6.5% in after-hours trading before recovering.

Friday is already bringing further drama, beginning with more comments from Musk. The billionaire in a tweet said he “strongly” believes in crypto but that “it can’t drive a massive increase in fossil fuel use, especially coal.”

Not long after, he followed up with another post saying that he’s working with Dogecoin “devs to improve system transaction efficiency,” describing the effort as “potentially promising.” Dogecoin jumped more than 20% after the tweet.