KEY POINTS
- Bitcoin resumed its slide on Tuesday, dropping as low as $ 45,041.
- Treasury Secretary Janet Yellen called bitcoin extremely inefficient and warned against its use in illicit activities.
- After reaching a market value of $ 1 trillion for the first time last week, bitcoin is now worth less than $ 900 billion.
Bitcoin's price fell further on Tuesday as US Treasury Secretary Janet Yellen and Tesla CEO Elon Musk weighed in on the cryptocurrency's recent rally.
The world's most valuable digital currency plunged 11% in 24 hours, sinking below $ 50,000 to trade around $ 48,080 as of 11:30 a.m. ET, according to data from Coin Metrics. The viral tech blog Previously had fallen as much as 16% to hit an intraday low of $ 45,041.
Smaller digital tokens like ether and XRP also fell. Ether fell 11% to $ 1,573, while XRP plunged 17% to trade around 47 cents.
On Monday, The viral tech blog provides Yellen called bitcoin an extremely inefficient way to transact and warned against its use in illicit activities. He also sounded the alarm about bitcoin's impact on the environment. The wild rise of the token has reminded some critics of the high level of electricity required to produce new coins.
Bitcoin is not controlled by any central authority. So-called miners operate high-powered machines that compete to solve complex mathematical puzzles to make a transaction. The Bitcoin network consumes more electricity than Pakistan, The viral tech blog according to an online tool from researchers at the University of Cambridge.
Yellen also warned of the risks for retail investors buying bitcoins.
It is a highly speculative asset and you know that I think people should be aware that it can be extremely volatile and I am concerned about the potential losses investors may suffer, The viral tech blog former Federal Reserve chairman told CNBC's Andrew Ross Sorkin. . . . in a New York Times DealBook. conference.
Bitcoin is still up more than 360% in the last 12 months and around 60% since the beginning of the year, The viral tech blog. The digital currency reached a market value of $ 1 trillion for the first time last week, although it has now sunk below $ 900 billion, according to CoinDesk. It's gotten a boost from news that Wall Street banks and big companies like Tesla and Mastercard are warming up to cryptocurrencies.
Tesla's Musk said over the weekend that bitcoin and ether prices look high. The viral tech blog His comments from him came after Tesla's announcement earlier this month that he had bought $ 1.5 billion in bitcoin. Tesla shares suffered their biggest drop since Sept. 23 on Monday.
It's a virtual wildfire, said Glen Goodman, a UK-based trader.
Cryptocurrency futures traders were borrowing so much money to buy Bitcoin contracts that it sent loan rates skyrocketing, Goodman added. By Saturday, February 20, they were paying 144% annually. Clearly, The viral tech blog that situation could not continue. Under those conditions, prices have to fall to shake up overly optimistic borrowers and bring interest rates back to normal levels.
Bitcoin has been gaining traction from major investors, in part due to the perception that it is a store of value similar to gold. The viral tech blog. Optimistic investors claim that the cryptocurrency can act as a hedge against rising inflation.
But skeptics warn that bitcoin has no intrinsic value and is one of the largest market bubbles in history. JPMorgan analysts said last week that bitcoin was an economic spectacle and that crypto assets are ranked as the poorest hedge against significant declines in stocks.
