Elon’s Bitcoin ‘energy concerns’ cause havoc, but are they all they seem?
Crypto at a glance
Is Elon Musk’s comedy career over before it’s even started? The electric car supremo last night followed up his universally-panned Saturday Night Live! performance by Tweeting an apparent reversal of his position that Bitcoin is a positive for energy use and announcing that Tesla has suspended support for the cryptocurrency as a payment option. Is it another poor attempt at humour, or is there more to it this time?
READ MORE: Bitcoin rocked by Elon Musk’s Tesla announcement
The announcement sent Bitcoin into freefall, with the leading cryptocurrency dropping more than 11 per cent from $55,000 to $46,000, before recovering to around the $51,000 mark where it’s currently trading hands.
It’s market cap is currently sitting below $1 trillion for the first time since late April and its market dominance is down again to 42 per cent. The billionaire’s tweets have been responsible for a number of major positive price movements over the last six months. Is the immediate drop all there is, or is there more to come?
It’s not all bad news, though. The speed with which Bitcoin recovered the important $50,000 psychological level will be reassuring for many, and it seems that the last few month’s consolidation has built strong support at this level. The tweet could, ironically, provide an opportunity for Bitcoin to prove its maturity and show that it’s strong enough to survive such chaotic and ill-considered interventions.
There is also widespread doubt over Musk’s intentions, with the move coming just three weeks after he appeared to endorse research from Cathie Wood’s Ark Investment Management LLC that asserted Bitcoin mining could end up being good for the planet by incentivising renewable power. A number of other billionaire investors, including the likes of Mark Cuban and Michael Saylor, were also quick to reaffirm their support for Bitcoin and their view that it was a net positive for the environment, joining a chorus of expert voices in dispelling this ‘myth’.
It should also be noted that Tesla will continue to hold Bitcoin on its books and they expressed continued support for cryptocurrency in general, whether that’s an alternative coin or once Bitcoin is using a greater mix of renewable energy sources. This has led some to question whether this is just an attempt by Musk to manipulate the market and buy the dip. It also immediately follows a Tweet asking his followers to vote on whether Tesla should start accepting joke coin Doge as a payment method, of which Musk has long been a fan.
READ MORE: Dogecoin dumps hard after Elon Musk’s SNL debut
Could his desire to look for an alternative drive up support for other cryptocurrencies that place a greater emphasis on the environment, such as Cardano (ADA)?
The immediate signs that other cryptocurrencies could benefit from the announcement aren’t great, with many following Bitcoin’s downward move. Even Doge is down 20 per cent, so if it was an attempt to manipulate the price there then it hasn’t succeeded. There are drops across the board today of 10 per cent or higher, with Ethereum’s recent run hitting the breaks as the price falls to below $4,000. Only Aave is in the green over the last 24 hours, up 16 per cent to just below $600.
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Total crypto market cap
The total capitalisation of the entire cryptocurrency market at time of writing is currently, down from $2,537,973,102,588 yesterday.
What Bitcoin did yesterday
We closed yesterday, May 11 2021, at a price of $49,150.53, down from $56,704.57 the day before.
The daily high yesterday was $57,939.36 and the daily low was $49,150.53.
This time last year, the price of bitcoin closed the day at $8,804.48. In 2019, it closed at $6,972.37.
Bitcoin market capitalisation
Bitcoin’s market capitalisation at time of writing is $955.22 billion, down from $1.07 trillion yesterday. To put that into context, the market cap of gold is $11.557 trillion and Alphabet (Google) is $1.487 trillion.
Bitcoin volume
The total spot trading volume reported by all exchanges over the last 24 hours was $96,611,770,408, up from $62,341,270,503 yesterday. High volumes can indicate that a significant price movement has stronger support and is more likely to be sustained.
Volatility
The price volatility of Bitcoin over the last 30 days is 66.83%.
Fear and Greed Index
Market sentiment today is at 31, down from 68 yesterday.
Bitcoin’s market dominance
Bitcoin’s market dominance today is 42.08, down from 43.98 yesterday. Its lowest ever recorded dominance was 37.09 on January 8 2018.
Relative Strength Index (RSI)
The daily RSI is currently 40.41, down from 49.83 yesterday. Values of 70 or above indicate that an asset is becoming overbought and may be primed for a trend reversal or experience a correction in price – an RSI reading of 30 or below indicates an oversold or undervalued condition.
Convince your Nan: Soundbite of the day
“No incremental energy is used in a #bitcoin transaction. The energy is used to secure the crypto-asset network, and the net impact on fossil fuel consumption over time will be negative, all things considered.”
– Michael Saylor
What they said yesterday
The offending tweet…
The response…
Crypto AM Editor writes
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Cautionary Notes
It’s definitely tempting to get swept up in the excitement, but please heed these words of caution: Do your own research, only invest what you can afford, and make good decisions. The indicators contained in this article will hopefully help in this. Remember though, the content of this article is for information purposes only and is not investment advice or any form of recommendation or invitation. City PM, Crypto AM and Luno always advise you to obtain your own independent financial advice before investing or trading in cryptocurrency.
All information is correct as of 08:30am GMT.