The Investment Centre Broker Discusses Whether Bitcoin is Collapsing In The Market After Musk’s Tweet On It
London, England, 2 June 2021, ZEXPRWIRE, Cryptocurrencies that appeared to be defying gravity only weeks ago landed with a thud on Wednesday, following a roller-coaster journey that may jeopardize their future as popular investments.
Bitcoin has been doing admirably, reaching an all-time high in April. However, after Elon Musk stated that Tesla will no longer receive cryptocurrencies owing to ecological issues, the price plunged even more in May.
The broker Nathan Bloomberg from The Investment Center says, Bitcoin and ether, the two most popular digital currencies, dipped as much as 30% and 45 percent, respectively. However, it recovered quickly after two of their most ardent supporters, Tesla Inc. (TSLA.O) CEO Elon Musk and Ark Invest’s (ARKK.P) Chief Executive Cathie Wood, expressed support for Bitcoin.
Market Value of Crypto:
On Wednesday, the market value of the whole crypto industry was over $1 trillion lower. However, according to data tracker CoinGecko.com, their market worth reached $1.8 trillion in early afternoon trade.
“Cryptocurrencies are no longer affecting a small portion of the world; they are already mainstream,” said Tom Plumb, portfolio manager of the Plumb Balanced Fund.
In other markets, a rush into safe-haven U.S. Treasury assets initially pushed rates lower. Still, rates increased when the Federal Reserve’s last meeting minutes were released, while U.S. stock indexes fell.
“There are a lot of leverage built-in crypto stocks, so there will be a spillover effect into stock markets in the short term,” said Thomas Hayes, chairman and managing member of hedge fund Great Hill Capital LLC. “There’s also quite the inflation worry since the market feels the Fed could have to boost rates unexpectedly if prices keep increasing,” he said.
Officials from the Federal Reserve downplayed any threat to the financial industry as a whole.
“By itself, I don’t view it as a systemic risk at this moment,” said James Bullard, president of the Federal Reserve Bank of St. Louis. “We’re all aware that cryptocurrency may be quite volatile.”
A series of tweets from Tesla CEO Elon Musk had already put pressure on Bitcoin, the largest and most well-known cryptocurrency.
Last week’s cryptocurrency price drops were spurred by Tesla CEO Elon Musk’s reversal on accepting Bitcoin as payment, citing the high environmental cost of “mining” Bitcoin, which needs a lot of electricity to run the computers that make Bitcoin.
Musk tweeted a ‘diamond hands’ emoji used in social media to indicate a position worth hanging on during Wednesday’s crypto sell-off.
Mike Venuto, the founder and chief investment officer of Toroso Investments, which manages $7 billion in assets, said, “His tweet assisted the rebound.” “Would it have regained some if it hadn’t been for it? Yes, indeed. But, if it had, would it have recovered well? Perhaps not.”
Bitcoin has lost 40% of its value after hitting a new high of $64,895 on April 14. It hit a low of $30,066 on Wednesday and traded at $37,323, down 13%. Tesla’s (TSLA.O) stock dropped 2.5 percent.
“The market should not be surprised by Bitcoin’s dramatic price decline,” Gavin Smith, CEO of crypto consortium Panxora, stated.
“Any asset that has grown as much as Bitcoin has in the last year may expect pullbacks when some investors take profits, as we’re witnessing now.”
Other crypto assets were hit hard by Bitcoin’s collapse, with ether, the cryptocurrency connected to the ethereum blockchain network, recently down 22.5 percent at $2,620.
According to CoinGecko, meme-based Dogecoin has also plummeted, shedding over 26% of its value to 35 cents.
Coin base and Binance, two cryptocurrency trading platforms, stated they were investigating or experiencing service difficulties due to the volatility. Coin base (COIN.O) saw its stock plummet 5.9% on Wednesday.
Bitcoin looked to accelerate as it went below its 200-day moving average, a chart position that traders watch.
“A flood of news is presently processing the crypto markets, fueling the negative case for price development,” Ulrik Lykke, executive director of crypto hedge firm ARK36, said.
Some crypto experts expected that more significant losses would follow, citing the breaking of a crucial technical barrier at $40,000 as evidence.
In an interview with Bloomberg, ARK CEO Wood, on the other hand, stated that she was sticking to her $500,000 Bitcoin projection.
Broker at The Investment Center claimed that investors may be departing Bitcoin for gold, citing data on open interest in CME Bitcoin futures contracts.
The fact that the crypto asset is falling at a time when inflation worries are mounting, according to economists, undermines the rationale for investing in the asset class to protect against inflation.
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Source: Bitteks
