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Bitcoin hits three-month low as Musk drives investors to exit

Bitcoin hits three-month low as Musk drives investors to exit

FILE PHOTO: A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken on Jan 8, 2021. (Reuters/Dado Ruvic)

SINGAPORE: Bitcoin dropped to a three-month low on Monday (May 17) as investors sold cryptocurrencies in the wake of Tesla boss Elon Musk's hinting over the weekend that the carmaker is considering or may have already sold some of its bitcoin holdings.

Musk has boosted crypto markets with his enthusiasm for the asset class, but has lately roiled trade by appearing to cool on bitcoin in favour of its one-time parody, dogecoin. The gyrations are beginning to spook even steeled traders.

Bitcoin fell more than 9 per cent on Monday to US$42,185, its lowest since Feb 8, while ether, linked to the ethereum blockhain, fell about 8 per cent to YS$3,227.22. Dogecoin fell nearly 7 per cent to US$0.48, and all three are well under recent records.

Last week Musk said Tesla would stop taking bitcoin as payment, owing to environmental concerns about energy use to process transactions. Defending that decision on Sunday, he suggested Tesla may have sold its own holdings.

In response to an unverified Twitter account called @CryptoWhale, which said: "Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn't blame him...," Musk wrote: "Indeed".

It is not clear whether he was confirming sales or whether he referred only to the fact that he had faced criticism.

READ: Commentary: Elon Musk wakes up to bitcoin’s environmental impact

Last week Musk said Tesla would not sell its bitcoin, but the cyrptocurrency has dropped by almost a quarter since Musk's reversal on Tesla taking it as payment.

Dogecoin is also yet to fully recover from Musk describing it as a "hustle", although he did boost the price last week by saying he was working to improve its efficiency.

For an asset class that has surged this year, with dogecoin up about a hundredfold, ether up more than fourfold and bitcoin gaining 45 per cent, some are beginning to call time on the wild ride.

READ: Dogecoin: 'Joke' virtual currency touted by Elon Musk

"Our weekend trading has kicked up, and we're looking at some serious liquidations through the exchanges," said Chris Weston of brokerage Pepperstone in Melbourne.

"I am closing the short-bitcoin/long-ethereum trade and moving to the sidelines, as I feel the dust really needs to settle here," he said.

Source: Reuters/lk

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