Costfoto | Barcroft Media | Getty Images
The price of Bitcoin fell further on Tuesday, after US Treasury Secretary Janet Yellen issued a warning about cryptocurrency.
The world’s most valuable digital currency has fallen 16 percent in the past 24 hours, falling below $ 50,000 to trade at $ 45,389 at 4:10 a.m. ET, according to Coin Metrics.
On Monday, Yellen called bitcoin an “extremely inefficient way to transact” and warned of its use in illicit activities. She also sounded the alarm about the impact of Bitcoin on the environment. The wild growth of the symbol reminded some critics of the high level of electricity needed to produce new coins.
Bitcoin is not controlled by any central authority. The so-called miners run high-powered machines that compete to solve complex mathematical puzzles to make a transaction pass. The Bitcoin network consumes more electricity than Pakistan, according to an online tool from researchers at Cambridge University.
Yellen also warned about the risks of bitcoin investments for retail investors on Monday.
“It’s a highly speculative asset and you know I think people should be aware that it can be extremely volatile and I’m worried about the potential losses that investors may suffer,” former Federal Reserve Chairman Andrew said. Ross Sorkin from CNBC at the New York Times DealBook conference.
Bitcoin is still growing by over 60% since the beginning of the year, and price fluctuations of over 10% are not a rarity in the crypto markets. Bitcoin once rose to nearly $ 20,000 in 2017 before losing 80% of its value the following year.
Digital currency first reached a market value of $ 1 trillion last week – although it has now fallen below $ 900 billion, according to CoinDesk. It gained momentum from the news of Wall Street banks and large companies, such as heating Tesla and Mastercard to cryptocurrencies.
Elon Musk, CEO of Tesla, said over the weekend that the prices of bitcoin and ether of rival symbols “seem high”. It comes after Tesla announced earlier this month that it had bought $ 1.5 billion worth of bitcoin. Tesla shares suffered the biggest drop since Monday, September 23, 2020.
Bitcoin has gained attraction from major investors, in part due to the perception that it is a deposit of value similar to gold. Bullish investors argue that cryptocurrency can act as a hedge against rising inflation.
But skeptics warn that bitcoin has no intrinsic value and is one of the biggest market bubbles in history. JPMorgan analysts said last week that bitcoin was an “economic show” and that cryptocurrencies were classified as “the poorest hedge” against significant declines in stocks.