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After the world’s largest cryptocurrency – Bitcoin – crashed below the US$30,000 mark, analysts started giving their verdict on its future direction.
There were two schools of thought at that point in time: one argued that Bitcoin and other digital currencies would continue their bear run as they are yet to bottom out, while another set of analysts argued that cryptocurrencies would now see a resurgence in the prices.
But one thing this volatile asset class stood true to is the volatility in their prices.
Last week, Tesla Inc’s (NASDAQ:TSLA) mercurial CEO Elon Musk indicated a change in his stance on Bitcoin. "Most likely the answer is that Tesla would resume accepting Bitcoin," Mr Musk said at the B Word cryptocurrency conference, adding that he had been investigating the fossil fuel usage in Bitcoin mining.
"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 also went on to say that he owns Bitcoin, Dogecoin and Ethereum in personal capacity. Musk’s remarks seemed to completely turn the tables on the bears in the cryptocurrency market. Earlier, it was his skepticism over Bitcoin’s environmental impact that had played a substantial role in the carnage of the cryptocurrency.
It has been a week since the B Word cryptocurrency conference, and here we are, analysing the impact of Mr Musk’s statements:
- Bitcoin: Prior to this, Bitcoin had crashed below the US$30,000 mark. However, after the statement by Mr Musk, the digital currency saw a sharp turnaround and is currently trading at its highest level since mid-June 2021. The prices of Bitcoin have rallied as much as 34% in the past week, and currently stand at US$39,928.84 – just shy of the US$40,000 mark.
- Ethereum: The world’s second largest cryptocurrency – Ether – reclaimed the US$2,000 mark after Mr Musk’s confession that he owns it. The prices of the cryptocurrency have surged by 29% in the past week, as they stand at US$2,300.
- Dogecoin: This “joke-gone-too-far” cryptocurrency was started as a meme. However, the cryptic Twitter love of Mr Musk for this digital asset has made it a hot stock asset for the year. With year-to-date returns of over 4,000% till now, this asset beats any bull run fair and square. After Mr Musk’s speech last week, Dogecoin has risen by 21% and is trading at US$0.205 a piece.
- USD Coin: This is a stablecoin, which doesn’t show volatility like the other three cryptocurrencies. It has remained unfazed by Mr Musk’s speech. Also, its year-to-date return stands at 0.12%.
