New York (CNN Business) – The bitcoin roller coaster continues. The major cryptocurrency rose to a new record above $ 58,000 on Sunday, but fell to just over $ 46,000 in early trading on Tuesday morning.
The move followed skepticism from Tesla Chief Executive Elon Musk; United States Treasury Secretary Janet Yellen and Microsoft co-founder Bill Gates.
Prices stabilized around $ 48,000 in early trading on Tuesday, but that’s still down more than 10% from Monday’s levels.
Bitcoin has recently soared after news that Tesla had invested $ 1.5 billion in the digital asset to keep it on its balance sheet, raising hopes that the cryptocurrency will become a more popular investment for other major companies.
But even Musk is beginning to show concern about bitcoin’s surge, noting in a tweet on Saturday that he thought prices of both bitcoin and ethereum, the world’s second-largest cryptocurrency, “seem high.”
Yellen, the former chairman of the Federal Reserve, also asked some questions on Monday.
Speaking at the New York Times DealBook conference, Yellen said bitcoin is “an extremely inefficient way to execute transactions” and expressed concern about wild price swings.
“It’s a very speculative asset and I think people should be careful. It can be extremely volatile and I am concerned about the potential losses investors could incur, ”said Yellen.
Gates’s negative comments didn’t help either.
In an interview with Bloomberg, Gates said it was one thing for Musk and Tesla to invest in bitcoin, but that doesn’t mean average investors should follow suit.
“I think people are getting carried away by these fads, who may not have that much money to spare, so I’m not optimistic about bitcoin,” Gates said.
My general thought would be that if you have less money than Elon you should probably be careful.
And just in case you keep the bill at home, everyone except Amazon CEO Jeff Bezos has less money than Elon, including Bill Gates.
It’s also worth noting that, like his good friend Warren Buffett, Gates has been skeptical of bitcoin for a while, a position that would have made the average bitcoin investor lose a lot of money if they had listened.
Gates even said in 2018 that he would lower bitcoin if there was an easy way to do it. The cryptocurrency was trading for less than $ 10,000 at the time.
Despite the recent downturn, bitcoin prices are still up more than 65% so far in 2021.
That dramatic rise is ringing alarm bells for many on Wall Street and reminds some veteran strategists of past market bells and speculative frenzy.
“While bitcoin has become significantly more credible in recent months due to interest from institutional investors,” Kristina Hooper, Invesco’s chief global market strategist, said in a report Monday, “it could still be the digital equivalent of the ‘tulipanmania’ that Holland in the 17th century and drove the price of tulip bulbs to astronomical and unsustainable levels before inevitably plunging.