power issue: elon musk’s twitter posts rocked the markets even though he said tesla would re-accept bitcoin as soon as mining uses sustainable energy
Bitcoin climbed back above $50,000 in Asian trade yesterday, recouping some of the 17% drop that followed elon musk’s twitter post that tesla inc would stop accepting digital tokens as payment for their vehicles.
The price of the world’s largest cryptocurrency fell from approximately $54,819 to $45,700, its lowest level since March 1, in less than two hours after publication. it recovered about half of that drop earlier in the Asian session, last trading at around $51,099.
Reading: Bitcoin recoups some losses after musk-triggered tumble
ether, the second largest cryptocurrency, followed a similar pattern, falling 14 percent to hit a low of $3,550, before recovering above $4,000.
“We are concerned about the rapid increase in the use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Musk wrote.
tesla announcement on February 2nd. 8 who had bought $1.5 billion in bitcoin and would accept it as payment for vehicles has been a factor behind the digital token’s price surge this year.
As a result, Musk’s comments rocked the markets even though he said Tesla would not sell any bitcoin and would re-accept the cryptocurrency as soon as mining transitioned to more sustainable energy.
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The digital currency is still 30% higher than before tesla’s february announcement.
At the current rate, bitcoin mining consumes roughly the same amount of energy annually as the Netherlands in 2019, data from the University of Cambridge and the International Energy Agency showed.
“the problem [of huge energy usage by bitcoin miners] has been known for a long time, so it’s nothing new, but coupled with musk’s recent comments about dogecoin, his latest comments seem suggest that their passion for cryptocurrencies may be waning,” tokyo makoto sakuma, a researcher at the nli research institute, said.
On Sunday, the dogecoin cryptocurrency lost more than a third of its price after Musk, whose twitter posts had stoked demand for the token earlier this year, called it a “hustle” on the online comedy show I live on Saturday night.
However, on Tuesday he asked his followers on twitter if they wanted tesla to accept dogecoin.
A broader sell-off of risky assets in traditional markets was another factor in the slump, said Jeffrey Wang, Vancouver-based head of Americas at Amber Group, a cryptocurrency services provider.
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“I don’t think everything is being sold just because of this news. this was like the straw that broke the camel’s back in terms of increasing liquidation risk,” he said.
On Wednesday, the S&P 500 fell 2.1 percent and the Nasdaq Composite Index lost 2.7 percent.
Bitcoin has struggled since hitting a record high of $64,895.22 in the middle of last month, falling to the top of $47,000 just 11 days later before hovering around $58,000 since earlier this month.
By contrast, ether soared to a record high of $4,180.12 on Wednesday and, even with the pullback, is up 435% this year, dwarfing bitcoin’s 75% rise.
ether’s popularity is due in part to the growing number of uses of the ethereum network, including non-fungible tokens, which are used to certify sole ownership of things like works of art online.
the bitcoin dominance index, a proportion of bitcoin’s share of the total market capitalization of all cryptocurrencies, fell to 42%, its lowest level since June 2018.
“The trade we’ve been pushing for a while now is short bitcoin, long ether,” said chris weston, head of research at broker pepperstone in melbourne. “The question everyone is asking is at what stage will ether have a larger market capitalization than bitcoin?”
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