Bitcoin (BTC) Price Drops 10% After Elon Musk Says Prices Look High

Bitcoin spiked to an all-time high on Tuesday reaching the $ 50,000 milestone at $ 50,602.

Alain Pitton | NurPhoto | fake images

Bitcoin slid on Monday, halting its impressive rally after Elon Musk said prices “look high.”

The world’s most valuable cryptocurrency plunged more than 10% to a price of $ 51,993 on Monday morning, according to data from Coin Metrics. At one point, bitcoin had fallen below the $ 50,000 level, dropping as low as $ 47,700.

It was not immediately clear what was behind bitcoin’s downward move on Monday. On Saturday, the CEO of Tesla said that the prices of bitcoin and the rival ether token appeared excessive. Bitcoin rallied to more than $ 58,000 on Sunday, but has since changed course.

At 10:25 a.m. ET, bitcoin was trading around 8% lower at a price of $ 53,375. It is worth noting that price variations of more than 10% are not a rarity in cryptocurrencies. Bitcoin once climbed to almost $ 20,000 in 2017 before losing 80% of its value the following year.

US Treasury Secretary Janet Yellen warned on Monday that bitcoin was a “highly speculative asset” and said she is concerned that investors will lose their money.

“It is an extremely inefficient way to conduct transactions, and the amount of energy that goes into processing those transactions is staggering,” said the former chairman of the Federal Reserve.

The digital currency continues to rise more than 80% so far this year. Last week, bitcoin reached a market value of $ 1 trillion for the first time; It is now below that mark again, according to CoinDesk. The token has received a boost from news from major Wall Street banks and Fortune 500 companies that are getting closer to cryptocurrencies.

Musk recently came out as a believer in bitcoin, calling it a “good thing” and saying he believes it is “on the verge of gaining wide acceptance from mainstream finance folks.”

Earlier this month, Tesla said it had bought $ 1.5 billion worth of bitcoin and would accept crypto as payment for its products. The electric vehicle maker made about $ 1 billion in paper earnings from its bitcoin investment, according to Dan Ives of Wedbush Securities.

Tesla is “on a trajectory to make more of its investments in Bitcoin than the proceeds from the sale of its electric vehicles (EVs) in all of 2020,” Ives estimated in a note published Saturday.

Bitcoin is gaining traction from major investors, in part due to the perception that it is a store of value similar to gold. Bitcoin bulls have tried to argue that investors should add the cryptocurrency to their portfolio to hedge against a possible surge in inflation.

But the skeptics are not convinced. Analysts at JPMorgan said in a note last week that bitcoin is an “economic spectacle” and that the rise of digital finance, not bitcoin, is the “true financial transformation story of the Covid-19 era.”


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