Bitcoin tanks 10% after Elon Musk say costs appear excessive
Bitcoin rose to an all-time high on Tuesday, hitting the $ 50,000 milestone at $ 50.602.
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Bitcoin slipped on Monday, breaking its formidable rally after Elon Musk said prices were “high”.
The world’s most valuable cryptocurrency fell over 10% to $ 51,993 on Monday morning, according to Coin Metrics. At one point, Bitcoin had fallen below the $ 50,000 level and dropped to $ 47,700.
It wasn’t immediately clear what was behind Bitcoin’s decline on Monday. On Saturday, Tesla’s CEO said the prices for Bitcoin and rival token Ether were too high. Bitcoin surged to over $ 58,000 on Sunday but has reversed course since then.
As of 12:00 p.m. ET, Bitcoin was trading over 8% lower at $ 53,195. It should be noted that price fluctuations of more than 10% are not uncommon with crypto. Bitcoin once surged to nearly $ 20,000 in 2017 before losing 80% of its value the following year.
US Treasury Secretary Janet Yellen warned Monday that Bitcoin was a “highly speculative asset” and said she was concerned that investors could lose their money.
“It is an extremely inefficient way to conduct transactions, and the energy used to process those transactions is staggering,” said the former Federal Reserve chairman.
The digital coin has increased by more than 80% this year. Last week, Bitcoin hit a market value of $ 1 trillion for the first time – according to CoinDesk, that value is now below that level again. The token was bolstered by news from major Wall Street banks and Fortune 500 companies that have warmed to cryptocurrencies.
Musk recently believed in Bitcoin, calling it a “good thing” and saying it was “about to be widely adopted by conventional finance professionals.”
Earlier this month, Tesla announced that it had purchased $ 1.5 billion worth of Bitcoin and was accepting crypto as payment for its products. Wedbush Securities’s Dan Ives said the electric vehicle maker made around $ 1 billion in paper profits on its Bitcoin investment.
Tesla is “on track to get more out of its Bitcoin investments than profits from sales of its EV (electric) vehicles throughout 2020,” said Ives in a note posted on Saturday.
Bitcoin is increasingly used by mainstream investors, partly due to the perception that it is a gold store that is similar to gold. Bitcoin bulls have tried to get investors to add the cryptocurrency to their portfolio to hedge against a possible spike in inflation.
But skeptics are not convinced. JPMorgan analysts said in a note last week that Bitcoin was an “economic sideshow” and that the rise of digital finance – not Bitcoin – was the “true financial transformation story of the Covid-19 era.”