Elon Musk's U-turn on bitcoin hits Tesla and other crypto-linked stocks as hundreds of billions get wiped off the digital-asset market
Elon Musk's turnaround on bitcoinsent Teslaand other crypto-linked stockslower on Thursday.
- Crypto mining stocks like Riot Blockchain and Marathon Digital fell 13%.
- The entire cryptocurrency market lost as much as $365 billion in value at one point on Thursday.
Tesla suspended vehicle purchases through bitcoin and will instead explore other digital currencies that are less energy-intensive, Musk announced Wednesday.
The entire cryptocurrency market shed around $365 billion to about $2.06 trillion as bitcoin, Ethereum's ether and Ripple's XRP fell sharply. The market recovered some losses later in the day as the value of combined digital assets rose to about $2.24 trillion.
Tesla's realization that bitcoin could be increasingly environmentally-damaging sent its shares 2.7% lower in Thursday's pre-market trading.
"All of a sudden, he's not so keen due to environmental concerns," Nigel Green, chief executive of investment firm deVere Group, said, and questioned why Musk didn't do more homework before Tesla invested $1.5 billion in bitcoin.
Read more: A 29-year-old crypto billionaire who's perfected digital-currency arbitrage shares 2 tips for investors looking to get started in trading - and explains why ether is unlikely to surpass bitcoin
"Musk likes being known as a contrarian. He likes to go against the crowd in a high-profile way. Is his waning interest in bitcoin at a time when huge amounts of institutional investment from major Wall Street banks is pouring in, part of this?" Green said.
Musk's move to accept bitcoin payments for Tesla was one of the most legitimate catalysts for the cryptocurrency's rally this year. He recently tweeted a poll asking followers whether his EV-maker should accept payment in dogecoin. Although he has been a vocal advocate of cryptocurrencies, he has warned investors to be cautious.
"In any event, the more Musk and others mainstream Doge and other crypto, the more it will appreciate and the less crypto traders will want to use it as a means of payment, as opposed to a store of value," Eric Berman, senior legal editor of US Finance at Thomson Reuters Practical Law, said. "Financially, it would be like paying for goods and services with gold or oil - though slightly less cumbersome."
- Top 10 must-visit destinations in South Africa
- Indian markets continue record run, Sensex scales 69K peak as power, bank shares advance
- Stock markets continue record run, Sensex scales 69K peak as power, bank shares advance
- Icy pebbles may be carrying water to developing planets across the cosmos!
- With $500 billion in reserves, LIC is the world’s fourth largest insurer