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Business February 22, 2021 2 mins read

Bitcoin Shed 17% of its Value Following Elon Musk’s Announcement

Business ı By Rochdi Rais

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Elon Musk Ceo of Tesla on Bitcoin

Bitcoin (BTC) sank over 17% to $50,883 Monday morning. This disrupted an outstanding rally after Elon Musk, CEO of Tesla, said the current Bitcoin price “seems high”. Ironically, Musk’s Tesla invested $1.5 billion in BTC early in February.

The largest cryptocurrency by both price and market capitalization rose to a new all-time high on Sunday, when it flirted with the $58,000 mark. However, Musk's announcement sent back the digital token into the $50,000 mark again. Still, Musk's comments may not be the only reason behind the downturn.

In 2017, Bitcoin reached over $19,000 before it shed 80% of its value in a blink of an eye. The highly volatile cryptocurrency market is one reason for the price plunge.

In a New York Times conference Monday, U.S. Treasury Secretary Janet Yellen warned of the “highly speculative asset,” adding the digital currency can result in heavy losses to greedy investors.

“It’s an extremely inefficient way of conducting transactions. The amount of energy consumed in processing those transactions is staggering,” Yellen said.

Bitcoin investors lost billions following the dip

Earlier in February, Tesla announced it had bought over $1.5 billion worth of Bitcoin. The U.S. car manufacturer filed for the sale with the Securities and Exchange Commission when the digital token was trading around $34,000. Consequently, Tesla’s move pushed established financial institutions to follow the same line.

For instance, MicroStrategy lifted its debt offering to $1 billion to buy BTC last week. Meanwhile, Bank of New York and MasterCard announced they will be accepting the digital currency. The interest showcased by both financial institutions and billionaires in Bitcoin helped give the digital token the boost it needed.

However, Monday’s Bitcoin dip resulted in over $13.6 billion BTC losses to companies that invested in the digital currency. For instance, MicroStrategy’s owned Bitcoin value was about $4.1 Billion. The shocking market dip turned MicroStrategy’s BTC holdings into a $3.8 Billion — a decline of more than $336 million.

Additionally, the total value of BTC held by 41 companies and institutional investors combined had shed $13.6 billion — turning $76.6 billion to $63.1 billion in less than 24 hours.

Elon Musk's Tesla would have made over $1 billion from Bitcoin if Musk didn't make the "seems high" announcement. The electric car manufacturer could have profited from its $1.5 billion investment if it sold Bitcoin when it was trading at $58,000.

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Rochdi Rais

Rochdi Rais is the Head of Growth and financial and legal writer at USA Herald. He has been writing and editing financial, legal and U.S. news for years with over +4000 articles published during his career.

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