Bitcoin and other cryptocurrency prices plummeted on Tuesday, following a stark warning from Treasury Secretary Janet Yellen.
“It’s an extremely inefficient way to execute transactions, and the amount of energy expended in processing those transactions is staggering,” Yellen said late Monday in an interview with the New York Times Dealbook. It is not the first time that she has criticized the cryptocurrency, which she says is often used for illegal transactions.
However, Yellen also said that digital currencies are likely to remain and that a “digital dollar” could serve as a simpler payment system for many Americans who don’t have that access.
The price of bitcoin BTCUSD,
was last down 14% to $ 47,891, a level it hasn’t seen in about a week, but it’s still up 73% so far this year. Losses weren’t limited to bitcoin, with prices of ether, the currency running on top of the etheric ETHUSD,
platform, discount 20% and for XRP XRPUSD,
which is linked to Ripple, down 22%.
The former Federal Reserve Chairman has made it clear since taking over the Treasury that her department will be scrutinizing bitcoin, with possible regulations going forward.
She’s just a “temporary game-stopper,” said Stephen Innes, Chief Global Markets Strategist at Axi, in a note to clients. “In addition to the enormous interest of the Middle East consortium in bitcoin ETF trading on the Toronto exchange that needs to be physically hedged, but as companies start adding physical coins to the balance sheet this year, that’s the groundbreaking panacea,” he said.
Bitcoin recently reached a $ 1 trillion market value for the first time, and major moves seen this year have attracted more investors and interest from companies such as Tesla TSLA, electric car manufacturer,
which revealed a $ 1.5 billion investment in bitcoin earlier this month and plans to accept it as payment in the future. And credit card giant Mastercard MA,
has also said it could allow traders to accept certain cryptocurrencies on its network later this year.
Read: Tesla bitcoin gambit has already made $ 1 billion, more than 2020 profit from car sales, analyst estimates
But bitcoin had a fleeting start to the week, falling Monday in a move some blamed on Tesla TSLA,
General Manager Elon Musk. Over the weekend, he tweeted that “BTC & ETH seem like a lot of fun” in response to Peter Schiff, CEO of Euro Pacific Capital, who defended gold over bitcoin. “Gold is not BS. It’s real money and better than both! “
That back and forth between Musk and Schiff continued on Tuesday, with the latter criticizing the electric car CEO’s bitcoin approach. Musk responded with an aubergine emoji, which some concluded was his way of turning the comment down. That emoji was banned by the social media group Facebook on its Instagram unit due to phallic symbolism and food.