Bitcoin drops after Musk implies that Tesla may sell cryptocurrency
Elon Musk continued to whipsaw the price of bitcoin, sending it to the lowest since February after implying in a Twitter exchange Sunday that Tesla may sell or has sold its cryptocurrency holdings.
Bitcoin slid below $45,000 for the first time in almost three months after the billionaire owner of the electric-car maker seemed to agree with a Twitter post that said Tesla should divest what at one point was a $1.5 billion stake in the largest cryptocurrency. It traded at $45,270 as of 5:51 p.m. in New York, down about $4,000 from where it ended Friday.
The online commentary was the latest from the mercurial billionaire in a week of public statements that have roiled digital tokens. He lopped nearly $10,000 off the price of bitcoin in hours after saying Tesla would not take it for cars. A few days earlier, he hosted "Saturday Night Live" and joked that Dogecoin, a token he had previously promoted, was a "hustle," denting its price. A few days later he tweeted that he was working with Doge developers to improve its transaction efficiency.
Musk's disclosure in early February that Tesla used $1.5 billion of its nearly $20 billion in corporate cash to buy bitcoin sent the token's price to record and lent legitimacy to electronic currencies, which have become more of a mainstream asset in recent years despite skepticism.
His latest dust-up with Bitcoin started with a tweet from a person using the handle @CryptoWhale, which said, "Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn't blame him..."
The Tesla CEO responded, "Indeed."
The Twitter account @CryptoWhale, which calls itself a "crypto analyst" in its bio, also publishes a Medium blog on market and crypto trends.
Musk spent hours Sunday responding to Twitter users who criticized his change of stance on bitcoin last week, a move he said was sparked by environmental concerns over the power demands to process bitcoin transactions. He said at the time that the company would not be selling any bitcoin it holds.
An outspoken supporter of cryptocurrencies with a cultlike following on social media, Musk holds immense sway with his market-moving tweets. He has been touting Dogecoin and significantly elevated the profile of the coin, which started as a joke and now ranks the fifth largest by market value.
Dogecoin was down 9.6% in the last 24 hours, trading at 47 cents late Sunday afternoon, according to data from CoinMarketCap.com.
Tesla did not immediately respond to an email seeking comment on Musk's tweet Sunday.
Musk's Sunday posts were the latest chapter in one of the zaniest weeks in a crypto world famous for its wildness. For die-hards, the renewed slumps in Bitcoin and other tokens have done nothing to deter crypto enthusiasts who say digital coins could many times their current value if they transform the financial system.
"We're looking at the long-term and so these blips, they don't faze us," Emilie Choi, president and COO of crypto exchange Coinbase Global, said last week on Bloomberg TV about the wild swings prevalent in the market. "You're looking for the long-term opportunity, and you kind of buckle up and go for it."
Aside from Musk's antics that sent Doge and Bitcoin on wild rides, a host of other developments have pushed around prices in the past eight days.
Tether, the world's largest stablecoin, disclosed a reserves breakdown that showed a large portion in unspecified commercial paper. Steve Cohen's Point72 Asset Management announced that it would begin trading cryptocurrencies. And a long-standing critique of the space reared its head again: illicit use.
The owners of the Colonial Pipeline reportedly paid a $5 million ransom in untraceable digital currencies to hackers that attacked its infrastructure, while Bloomberg reported that Binance Holdings, the world's biggest cryptocurrency exchange, was under investigation by the Justice Department and the Internal Revenue Service in relation to possible money-laundering and tax offenses.
But, "for many crypto assets such as bitcoin and Ethereum, the long-term story has not changed," said Simon Peters, an analyst at multiasset investment platform eToro. "This emerging asset class continues to revolutionize many aspects of financial services, and while nothing goes up in a straight line, the long-term fundamentals for crypto assets remain as solid as ever."
Bitcoin was swinging wildly on the weekend before Musk tweeted. The two days tend to be particularly volatile for cryptocurrencies, which - unlike most traditional assets - trade round-the-clock every day of the week. Bitcoin's average swing on Saturdays and Sundays this year is 4.95%.
That type of volatility is owing to a few factors: Bitcoin's held by relatively few people, meaning price swings can be magnified during low-volume periods. And the market remains hugely fragmented with dozens of platforms operating under different standards. That means cryptocurrencies lack a centralized market structure akin to that of traditional assets.