Bitcoin Plummeted to 3-month Low but then Recovers
Bitcoin rallied from a three-month low on Monday in a volatile session that saw investors initially selling and then buying cryptocurrencies in the wake of Tesla boss Elon Musk’s tweets about the carmaker’s bitcoin holdings.
In his latest tweet, Musk said "Tesla has not sold any bitcoin". That seeming clarification came after weekend tweets hinted that Tesla was considering or may have already sold some of its massive holdings.
Musk has boosted crypto markets with his enthusiasm for the asset class, but has lately roiled trade by appearing to cool on bitcoin in favour of its one-time parody, dogecoin. The gyrations are beginning to spook even steeled traders.
Bitcoin fell more than 9% on Monday to as low as ,185, its lowest since Feb. 8, but rallied back to around 45,190.
Tesla disclosed in February that it had bought .5 billion worth of bitcoin in the first quarter. At the end of April, Musk said the company sold 10% of its holdings "to prove liquidity".
Bitcoin, designed as a payment tool, is little used for commerce in major economies, hampered by high volatility and relatively costly transactions.
Last Wednesday, Musk said Tesla would stop taking bitcoin as payment, owing to environmental concerns about energy use to process transactions. Defending that decision on Sunday, he suggested Tesla may have sold its own holdings.
Musk said Tesla would not sell its bitcoin, but the cryptocurrency has dropped by almost a quarter since Musk’s reversal on Tesla taking it as payment.
Dogecoin has also yet to fully recover from Musk describing it as a “hustle”, although he did boost the price last week by saying he was working to improve its efficiency.
For an asset class that has surged this year, with dogecoin up about a hundredfold, ether up more than fourfold and bitcoin gaining 45%, some are beginning to call time on the wild ride.
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