Bitcoin rose to an all-time high on Tuesday, hitting the $ 50,000 milestone at $ 50,602.
Alain Pitton | NurPhoto | Getty Images
Bitcoin slid Monday, halting its stunning rally after Elon Musk said prices “seem high.”
According to data from Coin Metrics, the world’s most valuable cryptocurrency dropped more than 10% to a price of $ 51,993 Monday morning. At one point, bitcoin had fallen below the USD 50,000 level to USD 47,700.
It was not immediately clear what was behind bitcoin’s movement on Monday. On Saturday, Tesla’s CEO said the prices of bitcoin and rival token ether seemed excessive. Bitcoin surged to over $ 58,000 on Sunday, but has since changed course.
As of 10:25 a.m.ET, bitcoin traded about 8% lower at a price of $ 53,375. It’s worth pointing out that price swings of more than 10% are not a rarity in crypto. Bitcoin once climbed to nearly $ 20,000 in 2017, before losing 80% of its value the following year.
US Treasury Secretary Janet Yellen warned on Monday that bitcoin is a “highly speculative asset” and said she is concerned that investors will lose their money.
“It is an extremely inefficient way to execute transactions, and the amount of energy consumed in processing those transactions is staggering,” said the former Federal Reserve chairman.
The digital currency is still up more than 80% so far this year. Last week, bitcoin reached $ 1 trillion in market value for the first time – it’s now back below that figure, according to CoinDesk. The token has been boosted by news of major Wall Street Banks and Fortune 500 companies heating up to cryptocurrencies.
Musk recently came out as a proponent of bitcoin, calling it a “good thing” and saying he thinks it is “on the verge of widespread adoption by conventional financial folks.”
Earlier this month, Tesla said it had purchased $ 1.5 billion worth of bitcoin and would accept the crypto as payment for its products. The electric vehicle manufacturer made about $ 1 billion in paper profits from its bitcoin investment, according to Dan Ives of Wedbush Securities.
Tesla “is on track to get more from its Bitcoin investments than profits from the sale of its EVs (electric vehicles) by 2020,” Ives estimated in a note published Saturday.
Bitcoin is gaining traction from mainstream investors, partly because of the perception that it is a store of value comparable to gold. Bitcoin bulls have tried to argue that investors should add the cryptocurrency to their portfolios to hedge against a possible rise in inflation.
But skeptics are not convinced. Analysts at JPMorgan said in a note last week that bitcoin is an ‘economic side show’ and that the rise of digital finance – not bitcoin – is the ‘real financial transformation story of the Covid-19 era’.