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Bitcoin the price fell further on Tuesday as US Treasury Secretary Janet Yellen and Tesla CEO Elon Musk weighed on the recent cryptocurrency rally.
The world’s most valuable digital coin plunged 11% in 24 hours, falling below $ 50,000 to trade around $ 48,080 by 11:30 a.m. ET, according to data from Coin Metrics. It had previously fallen 16% to an intraday low of $ 45,041.
Yellen called Bitcoin on Monday a “extremely inefficient way of transacting“and warned against its use in illicit activities. It also sounded the alarm on the impact of bitcoin on the environment. reminded some critics of the level of electricity required to produce new parts.
Bitcoin is not controlled by any central authority. The so-called miners run high-powered machines that compete to solve complex mathematical puzzles in order to complete a transaction. Bitcoin’s network consumes more electricity than Pakistan, says online tool researchers from the University of Cambridge.
Yellen also warned of the risks for retail investors buying bitcoin.
“It is a highly speculative asset and you know I think people need to be aware that it can be extremely volatile and I am concerned about the potential losses that investors may incur,” said the former chairman of the Federal Reserve to CNBC’s Andrew Ross Sorkin in a New York Times DealBook. conference.
Bitcoin is still up over 360% in the past 12 months and around 60% since the start of the year, and price swings of over 10% are not uncommon in the markets. cryptography. Bitcoin once climbed to nearly $ 20,000 in 2017 before losing 80% of its value the following year.
The digital room reached $ 1 trillion in market value for the first time last week – although it has now fallen below $ 900 billion, according to CoinDesk. It was spurred on by news from Wall Street banks and big companies like You’re here and MasterCard warming to cryptocurrencies.
Tesla’s musk said over the weekend that bitcoin and ether prices “seems highHer comments came after Tesla announced earlier this month that it had bought $ 1.5 billion worth of bitcoin. Tesla Shares Monday suffered its biggest fall since September 23.
“It’s a virtual wildfire,” said Glen Goodman, a UK-based trader. “The wood was dry and waiting for a spark. Elon Musk was that spark.”
“Crypto futures traders were borrowing so much money to buy Bitcoin contracts, they skyrocketed borrowing rates,” Goodman added. “On Saturday, February 20, they were paying 144% per annum. Obviously, this situation could not continue. Under these conditions, prices must fall to shake off overly optimistic borrowers and bring borrowing rates back to normal levels. “
Bitcoin has been drawn to mainstream investors, in part because of the perception that it is a store of value similar to gold. Optimistic investors say cryptocurrency can act as a hedge against rising inflation.
But skeptics warn that bitcoin has no intrinsic value and is one of the biggest stock market bubbles in history. JPMorgan analysts said last week that bitcoin is a “economic side show“and that crypto assets rank as the” poorest hedge “against large stock declines.