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The price of Bitcoin fell further on Tuesday after US Treasury Secretary Janet Yellen issued a warning about the cryptocurrency.
The world’s most valuable digital currency was down 16% in the past 24 hours, falling below $ 50,000 to trade as low as $ 45,389 at 4:10 a.m. ET, according to data from Coin Metrics.
On Monday, Yellen called bitcoin an “extremely inefficient way to conduct transactions” and warned against its use in illegal activities. She also raised the alarm about bitcoin’s impact on the environment. The wild surge in the token has reminded some critics that it only takes electricity to produce new coins.
Bitcoin is not controlled by any central authority. So-called miners run powerful machines that compete to solve complex mathematical puzzles to keep a transaction going. Bitcoin’s network consumes more electricity than Pakistan, according to an online tool from Cambridge University researchers.
Yellen also warned on Monday about the risks of bitcoin investments for private investors.
“It’s a very speculative asset and you know I think people need to be aware that it can be extremely volatile and I’m concerned about potential losses investors could suffer,” the former Federal Reserve Chairman told CNBC’s Andrew Ross Sorkin in a New York Times DealBook. conference.
Bitcoin is still up more than 60% since the beginning of the year, and price swings of more than 10% are not a rarity in crypto markets. Bitcoin once climbed to nearly $ 20,000 in 2017, before losing 80% of its value the following year.
The digital coin first hit $ 1 trillion in market value last week, although it has now sunk below $ 900 billion, according to CoinDesk. It has been boosted by news from Wall Street banks and big companies like Tesla and Mastercard that are heating up to cryptocurrencies.
Tesla CEO Elon Musk said this weekend that bitcoin and rival token ether prices seem “high.” It comes after Tesla announced earlier this month that it had bought $ 1.5 billion worth of bitcoin. Tesla shares have suffered their biggest drop since September 23, 2020 on Monday.
Bitcoin has gained traction from mainstream investors, in part because of the perception that it is a store of value comparable to gold. Bullish investors argue that the cryptocurrency can serve as a hedge against rising inflation.
But skeptics warn that bitcoin has no intrinsic value and is one of the biggest market bubbles in history. Analysts at JPMorgan said last week that bitcoin was an “economic side show” and crypto assets are the “worst hedge” against significant falls in stocks.