Bitcoin, ETH and Dogecoin plummet after Ethereum and Musk founder's selloff
The price of bitcoin and other crypto assets plummeted. The price of bitcoin as of May 13, 2021 until 8:30 p.m. As a result, bitcoin's market capitalization collapsed below US$ 1 trillion to US$ 929 billion.
Ethereum, the crypto asset with the second largest market capitalization also fell 10.95% to US$ 3,784 per ETH. As a result, ethereum market cap remains US$ 435 billion.
The price of Dogecoin is the same. DOGE prices fell 14.72% to U$0.4151 per DOGE. Dus, dogecoin's remaining market capitalization is US$ 53.21 billion.
The cryptocurrency market plummeted after billionaire Elon Musk and ethereum co-founder Vitalik Buterin made a surprise appearance. The sharp decline was triggered by Buterin, the world's youngest crypto billionaire, abruptly moving cryptocurrencies worth more than US$2 billion.
Buterin donated US$ 1 billion in meme tokens, Dogecoin to the India Covid Relief Fund and various other charities and transferred US$ 1.3 billion worth of etherum tokens from its main public address to a separate wallet
Meanwhile, Tesla billionaire Elon Musk stopped using bitcoin to buy Tesla cars. The move caused concern as the founder of ethereum diluted ownership of the cryptocurrency and dropped the price of ethereum from a recent high of more than US$4,000 per ether token.
The cryptocurrency market has subled to more than US$2 trillion this year, with bitcoin as the world's largest cryptocurrency with a market capitalization of around US$1 trillion. The growth of the crypto market has also been supported by soaring ethereum prices and speculative madness also followed by Dogecoin.
Elsewhere, Elon Musk, Tesla's chief executive and a longtime supporter of Bitcoin, announced his company would suspend customers' use of bitcoin to buy its vehicles. "Cryptocurrency is a great idea on many levels and we believe it has a promising future, but it's not great for the cost environment," Musk said via Twitter.
Musk, who helped the price of bitcoin rise to more than $US60,000 earlier this year, cited environmental concerns surrounding how those who secure the bitcoin network, known as miners, power their machines.
In February 2021, Tesla revealed it had purchased US$1.5 billion of bitcoin and began accepting bitcoin as payment for car purchases in March. Dus, the price of bitcoin jumped more than 20%.
"Elon Musk has the ability to pump or drop the price of bitcoin by itself when it suits his interests," alex Kuptsikevich, senior financial analyst at FxPro, said in an emailed commentary as quoted by Forbes. He also said it was no surprise that Telsa subsequently announced it was selling some bitcoins and causing the sell-off to become more fierce.
"A great dependence on the market view on the statements of one large investor becomes a huge gap for the crypto market and this means risks that need to be noted. The fall in bitcoin also coincided with a correction in the S&P 500 and this once again proves that the composition of investors in both markets is well correlated," Kuptsikevich was quoted as saying by Forbes.
Even so, Musk said, Telsa will continue to hold bitcoin on its balance sheet and will restart bitcoin transactions in the future. He added that companies, which reportedly hope to enter the renewable multi-billion dollar credit market, are looking for other cryptocurrencies that have a smaller environmental impact.
"We're also looking at other cryptocurrencies that use <1% of energy/bitcoin transactions," Musk said. Tesla's share price also fell during after-hours trading.
"Tesla and bitcoin have always been a strange correlation, given the business credentials of electric car makers, and the enormous amount of energy consumed by cryptocurrencies," explained Laith Khalaf, financial analyst at brokerage AJ Bell as quoted by Forbes.
"Environmental issues are a very sensitive subject at the moment, and Tesla's move may serve as a warning to businesses and consumers who use bitcoin," Khalaf was quoted as saying by Forbes. He added that until now no one has considered its carbon footprint. Tesla may have generated US$101 million from bitcoin sales in the first three months of this year, but now investors will legitimately ask if the money could have been better spent elsewhere.
