Bitcoin, the world’s largest cryptocurrency slumped as much as 17 percent to $45,000 on Tuesday, sparking concerns from investors over the cryptocurrency’s sky-high valuations and its volatility in an unpredictable market. The cryptocurrency traded 13% lower, at $47,608.24, as of 11:45 p.m. in New York.
The value of the cryptocurrency has soared in 2021, with the price more than doubling this year to reach a record $58,350.41. Elon Musk, CEO of Tesla invested $1.5 billion in cryptocurrency this month and helped bitcoin to reach its market value above $50,000 but this investment may now lead to pressure on Tesla’s stock price as it has become sensitive to movements in bitcoin.
Craig Erlam, senior market analyst at OANDA stated that “the kind of rallies we’ve been seeing aren’t sustainable and just invite pullbacks like this.” Ether, the world’s second-largest cryptocurrency by market capitalization also slumped more than 17% and last bought $1,461, down almost 30% from last week’s record high.
As per the reports of CoinDesk, last week bitcoin hit $1 trillion in market value for the first time in the history - though it has now slumped below $900 billion. It’s marked value surged up from the news of Wall Street bank and the investment of large firms like Mastercard and Tesla. According to an online tool from the researchers at Cambridge University, bitcoin’s network consumes more electricity than Pakistan and it has a negative impact on the environment as well.
Meanwhile, Sumit Gupta, Co-Founder & CEO of CoinDCX said that “after reaching an all-time high of $58,000, Bitcoin saw a price correction today. This was expected as markets go through such correction cycles. However, the market showed signs of recovery after falling nearly 17%. Investments in Bitcoin, like any other asset, should be from a long-term perspective as the fundamentals are still going strong. Hence it is advised that investors buy the dips and hold with a long-term perspective.”