Bitcoin plummets on Musk’s pricing tweet
Elon Musk’s embrace of Bitcoin earlier this month week rocketed the cryptocurrency almost 50 percent higher to more than $58,000. His cold shoulder this weekend has it in free fall.
Bitcoin plunged as much as 17 percent and briefly back below $50,000 in New York, giving up more than $8,000 in a matter of hours after the world’s richest man tweeted his concern that the price had risen too high too quickly.
“Whatever he (Elon) does is going to dominate the news stream,” said Ed Moya, senior market anaa lyst at Oanda Corp
The world’s largest cryptocurrency has been on a tear this month, propelled by purchases from Musk’s Tesla Inc. and institutional investors who say Bitcoin is an attractive alternative to gold and the dollar.
In February alone, Bitcoin was up more than 60 percent, prompting commentary that the run-up is excessive. The digital token hit a new all-time high on Sunday and came close to surpassing $59,000. It traded at around $52,773 as of 9:49 p.m. in New York.
It’s widely believed that volatile weekend swings are driven by individuals trading the cryptocurrency at home. So it’s also possible that prices fell on Monday as institutional crypto traders, who follow normal business hours, responded to Musk’s Saturday tweet that Bitcoin prices “seem high.”
JPMorgan Chase & Co. strategists have warned about Bitcoin’s declining liquidity. Strategist Nikolaos Panigirtzoglou wrote in a note on Friday that liquidity for the digital coin was lower than that for the S&P 500 Index and gold, meaning “even small flows can have a large price impact,” he wrote.
“It should go without saying that new investors to Bitcoin should be prepared for major volatility and for prices to drop suddenly and as sharply as they have risen,” according to Neil Wilson, chief analyst at Markets.com.
Meanwhile on Wall Street, tech stocks pulled back on valuation concerns while commodities rallied and bond yields rose with investors pricing in stronger growth and faster inflation as the global economy recovers.
The Nasdaq 100 slid almost 2 percent toward a three-week low as investors questioned the appeal of expensive, growth-focused stocks. The S&P 500 Index fell for a fifth day, its longest losing streak in year. Gains for energy shares and financial companies limited losses on the Dow Jones industrial average. European and Asian markets were broadly negative.
Commodities were almost uniformly green. Brent oil climbed above $65 a barrel as Goldman Sachs Group Inc. predicted prices could advance into the $70s in coming months. Copper briefly rose above $9,000 a metric ton for the first time in nine years, taking another step closer to an all-time high set in 2011 as investors bet that supply tightness will increase as the world recovers from the pandemic.