BLOCKONOMIST
Read News

Read News For Me

Bitcoin recessions over 18% from the account positions days after Elon Musk tweeted prices 'seems too high'

After touching life-time highs of around $58,300, bitcoin prices fell over 18 percent in a two-day sell-off which took the premier cryptocurrency below the $50,000-mark. At the time of bordereau this copy, bitcoin was dealing 10.12 percent lower at $50,364.52. It touched a 24-hour high of $56,668.45 and a 24-hour low of $47,780.75. Year-to-date, bitcoin is up about 73 percent.

While the financial markets' general weakness could have weighed on the prices, billionaire CEO Elon Musk's latest tweets on the cryptocurrency may have accelerated the flash crash.

 On Saturday, the Tesla chief tweeted the price of bitcoin and ethereum seemed high. The maverick CEO responded to the economist and cryptocurrency skeptic Peter Schiff said that gold was better than both bitcoin and conventional cash. Musk said in a tweet: "Money is just data that allows us to avoid the inconvenience of barter ..." Bitcoin's recent gains have been fueled by signs it is gaining acceptance among mainstream investors and companies. Musk himself tweeted that Tesla had bought $1.5 billion worth of bitcoin. Besides, the carmaker said it would also start accepting Bitcoin as a payment method for its products.

Following bitcoin's recent golden run, analysts have raised caution signs over the cryptocurrency as headwinds from the official sector remain. "The risk (for bitcoin) comes from the official sector. On the contrary, the confidential sector embraces Bitcoin, both as a form of payment and as a way to invest. Still, the official sector may say enough is enough," Mohamed A El-Erian, chief economic adviser at Allianz, said recently.

Another reason for apprehension from experts is high volatility in bitcoin prices and ack of tangible backing. Bitcoin currently is not a productive manner for high-volume bartering. It is indisputably not a store of value as its price inconstancy at 80 percent is a dozen times higher than the euro. Sevenfold of the Russian rouble, said Harley Bassman, managing partner at Simplify Asset Management, told Reuters. "That said, it is a legitimate speculative asset, quite similar to Dutch tulips in 1636. Will it meet the same fate? That is unclear. As such, size your risk appropriately."Dutch tulips in the 1600s reached extraordinarily high levels before dramatically collapsing in 1637.