Bitcoin has dropped by over 20% as the market responds to Tesla CEO’s series of tweets hitting back at critics charging him for backtracking on his decision to sell Tesla cars for Bitcoins. Elon Musk, who has a widespread following amongst crypto investors, had earlier pointed out the issue of high energy consumption required to mine Bitcoins.
The first tweet in which Mr Musk announced that Bitcoin will no longer be accepted by Tesla led to bitcoin prices dropping below the $55,000 mark. However, following the announcements, criticisms on twitter began to surface and Elon Musk responded to a few of them. In some responses Mr Musk also hinted at diluting his company’s investments in Bitcoins. This triggered the downward trend and at press time, Bitcoin is trading below $45,000.
Earlier this year, Tesla had invested over $1.5 billion in bitcoins from its corporate cash reserve of $20 billion. However, Elon Musk’s response to a tweet does indicate that he is already planning to divest.
The second biggest currency by market cap Ethereum also dropped by over 20% since the downward rally started for Bitcoins. Currently, Ethereum is trading below $35,00. The drop in prices has allowed investors and experts to cast legitimate doubts on the future of bitcoins in 2021. We hope to get better clarity once the dust settles.