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.