Bitcoin drops below $50,000 knocking 17% off the cryptocurrency's Friday market value of $1TRILLION after Elon Musk suggested its price was overinflated
Bitcoin dropped below $50,000 on Monday, hitting its lowest level since mid-February, as investors worried that its price may have gotten too high, too fast.
The world's largest cryptocurrency in terms of volume fell to as low as $47,400, its weakest in one week. At one point, it lost nearly 17% of its value, or about $160 billion from its total market capitalization.
Bitcoin was last down 12.3% at $50,495.
It had rallied over the weekend to record levels, almost doubling year-to-date. It hit a market value of $1 trillion on Friday.
Elon Musk, whose tweets on bitcoin have added fuel to the cryptocurrency's rally, said on Saturday the price of bitcoin and ethereum seemed high. Ethereum or ether is the second-largest cryptocurrency by market capitalization and daily volume.
The Tesla boss made the remark on Twitter while replying to a user who said that gold was better than both bitcoin and conventional cash.
Musk, who earlier in the week remarked that he found the prospect of holding bitcoin adventurous for an S&P 500 company, 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.
Treasury Secretary Janet Yellen called bitcoin 'an extremely inefficient way of conducting transactions' Monday. She told CNBC: 'I don’t think that bitcoin … is widely used as a transaction mechanism.
'To the extent it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.
'It is a highly speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential losses that investors can suffer.'
Bitcoin dropped below $50,000 on Monday, hitting its lowest level since mid-February
Musk, an ardent proponent of digital currencies, has defended Tesla's recent purchase of $1.5 billion of bitcoin, which has ignited mainstream interest in the digital currency.
Bitcoin's gains have been fueled by signs it is gaining acceptance among mainstream investors and companies, from Tesla Inc and Mastercard Inc to BNY Mellon.
The digital currency is not tied to a bank or government and allows users to spend money anonymously.
It is has become popular enough that more than 300,000 transactions typically occur in an average day.
Tesla boss Elon Musk's tweets on bitcoin have added fuel to the cryptocurrency's rally
Musk said on Saturday the price of bitcoin and ethereum seemed high
Traders said Monday the move was largely technical, and not tied to any particular news catalyst.
'We did finally see some momentum gathering over the weekend, but weekend rallies haven't been sustainable lately,' said Joseph Edwards of Enigma Securities, a cryptocurrency broker in London.
'We do tend to think that there's a good chance of a down week and small correction coming in off of this, although it does little to dull medium-term prospects.'
Analysts at JP Morgan said Friday Bitcoin is an 'economic side show' and a poor hedge against a decline in equity prices.
Bitcoin had rallied over the weekend to record levels, almost doubling year-to-date
It hit a market capitalisation of $1 trillion on Friday
