Bitcoin (BTC) rallied over the past weeks, hitting record highs. The crypto surpassed $50,000 for the first time since its release. However, on Monday, its price plummeted down by 10%, ending at $51,993. Bitcoin briefly plunged below the $50,000 level during the session, dropping as low as $47,700. However, it managed to rebound soon.
At first, analysts weren’t sure what caused such a bearish mood on the market. However, the most plausible reason seems Tesla‘s CEO’s statement about Bitcoin trading overpriced. Elon Musk said on Saturday that Bitcoin price, along with its rival token’s price, seemed excessive. Despite that, the crypto skyrocketed to more than $58,000 on Sunday, but it pulled back today.
Earlier in Monday’s session, bitcoin plummeted down by 8%, exchanging hands at a price of $53,195. Still, price swings of more than 10% are quite a normal occurrence in crypto trading. Bitcoin once soared to nearly $20,000 in 2017 before losing 80% of its value the following year.
What do the officials and investors think about BTC’s surge?
Elon Musk isn’t the only one concerned about Bitcoin’s sudden rally. While the major tech companies’ interest in crypto was the reason which prompted such a surge, investors fear that the rally won’t sustain itself.
On Monday, U.S. Treasury Secretary Janet Yellen cautioned investors, stating that bitcoin was a highly speculative asset. She’s worried about traders losing their money.
According to the former Federal Reserve chair, it’s an extremely inefficient way of conducting transactions. She also added that the amount of energy that’s consumed in processing those transactions is staggering.
Despite today’s plunge, Bitcoin is still trading higher by more than 80% this year. Last week, the crypto reached $1 trillion in market value for the first time. However, it’s dropped below that mark again for now.
Major Wall Street Banks and Fortune 500 companies showed interest in buying Bitcoin and accepting it as a payment method, causing the crypto’s current rally.
Elon Musk also joined the ranks of those investors who wanted to take closer notice of the crypto. He even called it a good thing and declared that the crypto was on the verge of getting broad acceptance by more conventional finance people.
Furthermore, Tesla recently announced that it had bought $1.5 billion worth of bitcoin and planned to accept the crypto as payment for its products. Ives even estimated that the company might make more profit from its Bitcoin investments than from selling its electric vehicle cars in all of 2020.