Digital tokens linked to real shares plummeted over the weekend after Elon Musk’s Twitter followers suggested he sell 10% of his investment in Tesla.
The crypto-revolution has accomplished many things, like converting photos of dogs into digital gold, luring talent and real money away from Wall Street, and introducing a baffling assortment of language into mainstream finance. You can now add this: predicting what will happen in the stock market.
Tesla Inc.’s stock dropped on Monday morning, but crypto-watchers expected this. That’s because digital tokens tied to real shares plummeted over the weekend after Elon Musk’s Twitter followers suggested he sell 10% of his investment in Tesla.
On Fridays, the stock market in the United States closes for the weekend at 8 p.m. New York time, and does not reopen until 4 a.m. Monday. Crypto, on the other hand, operates 24 hours a day, seven days a week. On Sunday and early Monday, traders on the FTX market and other venues were able to bet on Musk’s tweets. They were mostly correct.
On Friday, the real stock closed at $1,222.09, and when trading resumed on Monday, it had fallen as low as $1,133. On FTX, Tesla tokens traded between $1,110 and $1,170 on Sunday.
Tesla and other well-known companies’ tokens aren’t actually issued by the companies themselves. According to FTX’s website, the tokens are backed by genuine Tesla shares held by a company called CM-Equity, and the tokens “may be redeemed with CM-Equity for the underlying shares if desired.” In the United States and other prohibited jurisdictions, they are not available for trading.
On Sundays, stock traders can unplug until 6 p.m. New York time, when the S&P 500 and other index futures resume trading at CME Group Inc.’s exchange after a weekend hiatus. However, if cryptocurrency becomes more mainstream, their days may be numbered.