Bitcoin reached the milestone of a $ 1 trillion market capitalization last week. However, it appears that a tweet from Tesla CEO Elon Musk, a few words of caution from Treasury Secretary Janet Yellen, and comments from Microsoft co-founder Bill Gates are causing its value to fall rapidly.
The popular cryptocurrency fell to just over $ 47,000 on Tuesday, after breaking the $ 58,000 mark on Sunday afternoon. Musk tweeted on Saturday that “BTC and ETH look high hahaha”, referring to Bitcoin and the digital currency Ethereum. Musk’s tweet was part of a reply to a tweet from Peter Schiff, chief market strategist at brokerage Euro Pacific Capital, on the value of Bitcoin against the gold-backed currency.
In an interview with Bloomberg, Gates gave his take on Bitcoin and the idea that a tweet from Musk can affect him so dramatically.
“I am not bullish on Bitcoin,” he said. “If you have less money than Elon, you should probably be careful.”
Gates also raised concerns about the massive energy use of Bitcoin, similar to a point Yellen made during the DealBook conference on Monday. He commented that the amount of energy used for transactions is “staggering.”
“I don’t think Bitcoin … is widely used as a transaction mechanism,” he said, according to CNBC. “To the extent that it is used, I am afraid it is often for illicit financing. It is an extremely inefficient way of conducting transactions, and the amount of energy that goes into processing those transactions is staggering.”
Bitcoin and other crypto currencies like Dogecoin require great computing power for people to be able to transact. These heavy computer calculations, also known as mining, require a large amount of energy, more than the country of Argentina.
For most of 2020, Bitcoin rallied from its low of just $ 5,000 in April to surpass $ 29,000 by the end of the year.