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Bitcoin’s price continued to decline Tuesday after Treasury Secretary Janet Yellen issued a warning about the cryptocurrency.
The world’s most valuable digital coin fell 16% in the past 24 hours and fell below $ 50,000 at 4:10 a.m. ET, according to Coin Metrics, to only trade $ 45,389.
Smaller digital tokens like Ether and XRP also fell. Ether fell 15% to a price of $ 1,497 while XRP fell 21% and traded 45 cents.
On Monday, Yellen described Bitcoin as an “extremely inefficient way to conduct transactions” and warned against its use in illegal activities. She also alerted about the impact of Bitcoin on the environment. The token’s wild wave has reminded some critics of the sheer electricity required to make new coins.
Bitcoin is not controlled by any central authority. So-called miners operate high-performance machines that compete to solve complex mathematical puzzles to carry out a transaction. According to an online tool by researchers at Cambridge University, the Bitcoin network uses more electricity than Pakistan.
Yellen also warned on Monday of the risks of investing in Bitcoin for retail investors.
“It is a highly speculative asset and you know I think people should be aware that it can be extremely volatile and I am concerned about possible losses that investors may suffer,” the former chairman said Federal Reserve told CNBC’s Andrew Ross Sorkin at a New York Times DealBook conference.
Bitcoin is still up more than 60% since the start of the year, and price fluctuations of more than 10% are not uncommon in crypto markets. Bitcoin once surged to nearly $ 20,000 in 2017 before losing 80% of its value the following year.
The digital coin hit a market value of $ 1 trillion for the first time last week – although it has now dropped below $ 900 billion, according to CoinDesk. The news from Wall Street banks and big corporations like Tesla and Mastercard has turned into cryptocurrencies.
Elon Musk, Tesla’s CEO, said over the weekend that the prices of Bitcoin and rival token Ether “seem high”. It comes after Tesla announced earlier this month that it had bought $ 1.5 billion worth of Bitcoin. Tesla stock posted its biggest drop since September 23, 2020 on Monday.
Bitcoin has caught on with mainstream investors, partly due to the assumption that it is a store of value that is similar to gold. Bullish investors claim the cryptocurrency can serve as a hedge against rising inflation.
However, skeptics warn that Bitcoin has no intrinsic value and is one of the largest market bubbles in history. JPMorgan analysts said last week that bitcoin is an “economic sideline” and that crypto assets are the “worst hedge” against significant stock declines.