Bitcoin, Ethereum and Ripple coins - largest cryptocurrencies by market capitalisation.
When the world’s largest cryptocurrency – Bitcoin -- crashed below the US$30,000-mark on 20 July 2021, no one would have thought that it would reclaim the US$40,000 level within a week.
But here we are. Bitcoin has rallied by a massive 39% from July lows in these 10 days and is trading at US$40,020.93 – its highest level in more than one-and-a-half months.
But what has caused this Bitcoin rally? Well, probably the very same reason that triggered its crash – Tesla Inc’s (NASDAQ:TSLA) mercurial CEO Elon Musk. It was Musk who had triggered the sell-off of Bitcoin in April 2021, by publicly voicing his apprehensions about the environment hazard of the digital asset.
But what has he done to trigger the rally now?
A couple of months ago, Mr Musk had publicly said that the company led by him – Tesla – won’t be accepting Bitcoin from customers for purchase of electric vehicles. However, recently at the B Word cryptocurrency conference, he seemed to take a U-turn on Bitcoin when he said, "most likely the answer is that Tesla would resume accepting Bitcoin".
He assured that he was doing due diligence over the environment impact of Bitcoin – a process that is half finished. "I wanted a little bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50%, and that there is a trend towards increasing that number, and if so, Tesla would resume accepting Bitcoin," he added.
Mr Musk didn’t stop here: while Tesla as a company openly holds stock of Bitcoin, he said he owns three cryptocurrencies – Bitcoin, Ethereum and Dogecoin – in his personal capacity.
Musk’s positive tone on Bitcoin was enough to stoke the Bitcoin rally that we are seeing right now.
What does the future hold?
Well, to put it in simple words, Bitcoin might cross the US$50,000 mark – if the market is left undisturbed – before the end of this calendar year.
One might wonder what it means to leave Bitcoin undisturbed. Well, to understand that digital currency market, we have to realise that all cryptocurrencies, save the stablecoins, are very volatile in nature. Even a mere statement, or a meme put out by a verified handle, or an influencer can swing the trend for the cryptocurrency. A critical tweet by Mr Musk may lead to a sustained crash in Bitcoin, while a tweet which reflects an iota of positive attitude towards Bitcoin may lead to a rally.
As on date, no one knows for sure when Tesla would restart taking Bitcoins as payments for their cars – even if they would. What Mr Musk said a week back is just an intention. If it happens, cryptocurrency prices would continue their climb towards the historic level, and probably, even higher. The move will help a lot in the global acceptance of digital currencies, after all. But one critical statement about the digital asset and we might have to prepare for the worst.