After touching life-time highs of around $58,300, bitcoin prices fell over 18 percent in a two-day sell-off which took the premier cryptocurrency below the $50,000-mark. At the time of writing this copy, bitcoin was trading 10.12 percent lower at $50,364.52. It touched a 24-hour high of $56,668.45 and a 24-hour low of $47,780.75. Year-to-date, bitcoin is up about 73 percent.
While the general weakness in the financial markets could have weighed on the prices, billionaire CEO Elon Musk's latest tweets on the cryptocurrency may have accelerated the flash crash.On Saturday, the Tesla chief tweeted the price of bitcoin and ethereum seemed high. The maverick CEO was responding to economist and cryptocurrency skeptic, Peter Schiff, who said that gold was better than both bitcoin and conventional cash.
Musk said in a tweet: "Money is just data that allows us to avoid the inconvenience of barter ..."
"That said, BTC & ETH do seem high lol," he added.
An email saying you have gold is not the same as having gold. You might as well have crypto.
Money is just data that allows us to avoid the inconvenience of barter.
That data, like all data, is subject to latency & error. The system will evolve to that which minimizes both.— Elon Musk (@elonmusk) February 20, 2021
"The risk (for bitcoin) comes from the official sector. On one hand, the private sector is embracing bitcoin, both as a form of payment and as a way to invest but the official sector may say enough is enough," Mohamed A El-Erian, chief economic adviser at Allianz said recently.
"Bitcoin presently is not an efficient manner for high-volume transacting, and it is certainly not a store of value as its price volatility at 80 percent is a dozen times higher than the euro and sevenfold of the Russian rouble," said Harley Bassman, managing partner at Simplify Asset Management told Reuters.
"That said, it is a perfectly legitimate speculative asset, quite similar to Dutch tulips in 1636. Will it meet the same fate? That is unclear. As such, size your risk appropriately."
Dutch tulips in the 1600s reached extraordinarily high levels before dramatically collapsing in 1637.