After a turbulent start to the week, Bitcoin was once again under selling pressure on Tuesday, tumbling below the key $50,000 level.
Some were pointing the finger at Treasury Secretary Janet Yellen, who labeled Bitcoin an “inefficient” digital currency and one that is often used for illegal transactions, in an interview with the New York Times’ Dealbook on Monday.
“People should beware it can be extremely volatile and I do worry about potential losses that investors could suffer,” said Yellen. She has also made clear her department may be looking closer at Bitcoin’s risks for investors and possibly even regulation.
It isn’t the first time she has directed criticism at the highly popular cryptocurrency and its ilk. While serving as Federal Reserve chair, she called it “highly speculative.
The price of Bitcoin was last down 10% to $48,016, a level it hasn’t tapped in roughly a week, and a 24-hour range has seen the crypto swing between $44,964.49 and $55,053.91. The effect was being felt across a range of cryptocurrencies, with ether, the currency built on top of the ethereum platform, off 15% and XRP, which is pegged to Ripple, down 19%.
Volatility is nothing new to Bitcoin veterans. But this year has seen Bitcoin scale new heights, driven by both institutional buying and speculative hype. Tuesday’s losses bring its year-to-date gain down to 57%, which is still miles ahead of other assets.
Some blame for recent weakness has also been cast at a weekend tweet by Tesla Chief Executive Elon Musk. He was responding to Pacific Capital Chief Executive Peter Schiff, who commented over
that Bitcoin “which is digital fiat, is even more BS than the paper fiat issued buy central banks. Gold is not BS. It’s real money and better than both!”
Within that thread, Musk responded that money was “just data that allows us to avoid the inconvenience of barter.” Then he added: “That said: BTC & ETC do seem high, lol.”
Some may have winced at those words, given Musk is viewed as a cryptocurrency cheerleader. Bitcoin enthusiasts cheered and prices climbed after the electric-car maker earlier this month announced a $1.5 billion investment in Bitcoin, and said in future it would accept payments in the cryptocurrency.
While that sparked some debate about whether that was wise and what it meant for Bitcoin’s status as a legitimate asset, Musk’s company still made $1 billion out of that move.
Neil Wilson, chief market analyst at Markets.com, said while Musk’s “too high” comment may have spooked some investors, he feels it was an “in-joke for followers.
“More importantly the market was ripe for a sharp technical pullback after a parabolic move, the kind that usually comes down under its own weight. There could be further to tumble—a 30% drawdown as we had in January this year would see prices back to $40,000,” he said.
Tesla shares, meanwhile, were under pressure on Tuesday, leading a drop across technology shares. That is after the stock slid 8% on Monday, for a drop of about 21% from a 52-week high, one definition of a bear market.