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The price of bitcoin continues to slump, dropping below $ 30,000 early in Tuesday’s session and abandoning nearly all digital currency gains for the year, according to Coindesk.
Bitcoin hit a high of $ 64,829 in April, while other cryptocurrencies have skyrocketed as well. Ethereum topped $ 4,100 in May, up 466% for the year at the time, but has since fallen below $ 1,900. The sharp swings have underscored the speculative nature of cryptocurrencies since their emergence in recent years, with factors such as a recent regulatory crackdown in China and various Elon Musk’s tweets sending their value unpredictably.
Supporters of cryptocurrencies have touted their benefits as investments as well as their potential usefulness in global trade. Wall Street banks, including JPMorgan Chase and Goldman Sachs, have allowed their clients to invest in bitcoin. Cathie Wood, CEO of ARK Investments and a prominent crypto propellant, predicted in November that the price of bitcoin could reach $ 500,000.
Yet the roller coaster trade has also brought warnings from financial analysts.
“When investing in cryptocurrency, it’s important to remember that volatility is the name of the game,” Bankrate.com analyst James Royal said in an email. “Volatility is magnified, both up and down, by the fact that the price is heavily influenced by the sentiment of traders, and traders can quickly go from rabid optimism to gloom.”
Michael Burry – a renowned investor who rose to prominence by betting against the housing market before the 2008 financial crisis and who was the focus of the 2015 film “The Big Short” – has an even more dire vision. In a series of tweets that have since been deleted, he predicted the “mother of all crashes” related to the heavy bets of millions of investors on cryptocurrencies and so-called “memes stocks” like Gamestop, according to Bloomberg. .
How Cryptocurrency Impacts the Environment 4:16 AM
Bitcoin prices were already under pressure this spring when the China Banking Association on May 18 ordered financial institutions across the country to stop providing cryptocurrency services due to extreme volatility. The move rocked the prices of digital currencies, with some coins losing more than 20% of their value overnight.
New trends
Musk, the CEO of electric car maker Tesla, has also apparently influenced bitcoin this year. The price skyrocketed in February after announcing that Tesla had purchased $ 1.5 billion worth of bitcoin and continued to climb the following month when the company began accepting the asset as payment for its vehicles.
But crypto prices fell after Musk sharply reversed course last month and said Tesla would stop accepting bitcoin, citing the environmental impact of bitcoin “mining”. The massive computing power required to produce the cryptocurrency consumes as much electricity in a year as countries like Malaysia, Sweden or Ukraine, according to the Cambridge Bitcoin Electricity Consumption Index.
The Associated Press contributed to this report.
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