Crypto Restricted On Robinhood After Musk Comments Spike Bitcoin

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by Tyler Durden
Friday, Jan 29, 2021 - 08:58 AM

If the SEC wants to look into anyone for market manipulation, maybe they should leave Reddit alone and start looking once again at their old nemesis Elon Musk. After all, it was Musk's "GameStonk!" tweet that helped light the fuse for the stock to rocket in after hours trading earlier this week.

Now, Musk's cheerleading of crypto appears to have caused Robinhood to restrict trading - once again - in an asset "due to extraordinary market conditions". 

“Due to extraordinary market conditions, we’ve temporarily turned off Instant buying power for crypto,” Robinhood told CNBC on Friday morning. “Customers can still use settled funds to buy crypto. We’ll keep monitoring market conditions and communicating with our customers.”

As we noted earlier this morning, just around 420am ET, the world's richest man singlehandedly pushed bitcoin up by 15%, boosting its market cap by around $80 billion, with a single tweet: "In retrospect, it was inevitable".

What is he referring to? The answer was to be found in his Twitter bio, which was changed to just one word: "#bitcoin"

As a reminder, three weeks ago we predicted that Elon Musk would be instrumental in pushing bitcoin above $100,000 per token, when discussing the strategy of companies to convert existing cash to bitcoin, we said that "countless other publicly-traded firms will now rush to convert all their cash (and more) into bitcoin, while abandoning  existing operations in hopes of becoming bitcoin investment pools and having their shares similarly snapped up by whale investors such as Morgan Stanley. First Trust, JPMorgan, Alliance Bernstein, and all the other institutions which are currently long and adding to their Microstrategy holdings."

Cryptocoin dogecoin, which is based solely on a popular "doge" meme, was also up as much as 800% on Friday. Musk has Tweeted numerous times in support of dogecoin, most recently on Thursday. 

For Robinhood, the interruption comes while the platform continues to try and put out fires from yesterday's decision to limit trading in high short interest names like GME and AMC.

We noted this morning that Robinhood had reportedly drawn on credit lines and tapped investor cash to the tune of $1 billion - after its CEO took to both Bloomberg and CNBC last night to say that the brokerage was not having liquidity issues.