Bitcoin Loses 17 Percent Following Elon Musk’s Comments
Elon Musk’s embrace of Bitcoin earlier this month week rocketed the cryptocurrency almost 50% higher to more than $58,000. His cold shoulder this weekend whipsawed the largest digital asset.
Bitcoin trimmed losses to 8% after plunging as much as 17% earlier Monday. It briefly came back below $50,000 in New York, giving up more than $8,000 in a matter of hours after the world’s richest man tweeted his concern that the price had risen too high too quickly.
“Whatever he (Elon) does is going to dominate the news stream,” said Ed Moya, senior market analyst at Oanda Corp
The world’s largest cryptocurrency has been on a tear this month, propelled by purchases from Musk’s Tesla Inc. and institutional investors who say Bitcoin is an attractive alternative to gold and the dollar.
In February alone, Bitcoin was up more than 60%, prompting commentary that the run-up is excessive. The digital token hit a new all-time high on Sunday and came close to surpassing $59,000. It traded at around $52,782 as of 10:20 a.m. in New York.
It’s widely believed that volatile weekend swings are driven by individuals trading the cryptocurrency at home. So it’s also possible that prices fell on Monday as institutional crypto traders, who follow normal business hours, responded to Musk’s Saturday tweet that Bitcoin prices “seem high.”
Meanwhile, JPMorgan Chase & Co. strategists have warned about Bitcoin’s declining liquidity. Strategist Nikolaos Panigirtzoglou wrote in a note on Friday that liquidity for the digital coin was lower than that for the S&P 500 Index and gold, meaning “even small flows can have a large price impact,” he wrote.
“It should go without saying that new investors to Bitcoin should be prepared for major volatility and for prices to drop suddenly and as sharply as they have risen,” according to Neil Wilson, chief analyst at Markets.com.
Central American Bank for Economic Integration Supports El Salvador’s Bitcoin Law
The Central American Bank for Economic Integration (CABEI), which has 15 member countries, will help El Salvador implement bitcoin as legal tender.
The CABEI president has expressed his support. “We’re very optimistic,” he said.
The head of the Central American Bank for Economic Integration (CABEI) expressed his support for El Salvador’s bitcoin law Monday. CABEI Executive President Dante Mossi said that the bank will give El Salvador technical assistance to implement bitcoin as legal tender.
Last week, El Salvador became the first country in the world to pass a law making cryptocurrency legal tender.
The CABEI has 15 member countries: Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, Dominican Republic, Belize, Mexico, Republic of China (Taiwan), Argentina, Colombia, Spain, Cuba, and Korea. The bank’s objective is to “promote the economic integration and the balanced economic and social development of the Central American region,” its website details.
Mossi said his organization will work with El Salvador’s finance ministry and central bank to select a team to work on the implementation, Reuters reported.
Mossi believes that the move to make bitcoin legal tender would offer many benefits to people in El Salvador. For example, it would lower the cost of remittances for relatives of Salvadorans living abroad, he explained.
The CABEI executive president also called on El Salvador’s government to develop a regulatory framework for bitcoin in order to prevent “bad actors” from taking advantage of the system’s anonymity, the publication conveyed.
Following El Salvador’s move to make bitcoin legal tender, lawmakers in a number of Latin American countries have expressed their interest in bitcoin.
The countries include Paraguay, Argentina, Panama, Brazil, and Mexico. Moreover, Tonga and Tanzania have also reportedly expressed interest in bitcoin.
Venture Capitalist Tim Draper Reaffirms His $250K Bitcoin Price Prediction by 2022
American venture capital investor, Tim Draper, said that he thinks bitcoin could reach $250K by 2022, and during an interview with CNBC’s Jade Scipioni this week, Draper reiterated his six-digit bitcoin price forecast made in April 2018.
Tim Draper, the venture capitalist who has his hands in a myriad of blockchain and crypto companies, discussed his bitcoin (BTC) price prediction with CNBC this week.
Draper is well known in the crypto community as he has founded a number of firms that work within the industry. He has also founded organizations like Draper Fisher Jurvetson (DFJ), Draper University, Draper Venture Network, Draper Associates, and Draper Goren Holm.
Draper is famous for purchasing thousands of bitcoin (BTC) in July 2014 from the U.S. Marshals Service auction that sold BTC stemming from the Silk Road marketplace. Back then, Draper predicted that BTC would reach $10K per coin and this prediction came to fruition. This made people begin to think of Draper as an oracle, and he was pressed for a new prediction when BTC came close to the $20K zone in 2017.
After many reporters asked Draper his next bitcoin price forecast, he finally answered on Friday the 13th, April 2018. “Serious winds (of change) at our block(chain) party last night,” Draper explained to his followers on Twitter. “I predict $250K by 2022,” Draper added. Since then, as far as predictions are concerned, Draper stepped out of the limelight and many other investors have given their own bitcoin price predictions over the last three years.
Now that BTC has tapped a new all-time-high above $64K per unit, Draper is once again standing behind his $250K prediction. While speaking with CNBC’s Jade Scipioni on the broadcast “CNBC Make It,” Draper said:
“I think I’m going to be right on this one. I’m either going to be really right or really wrong [but] I’m pretty sure that it’s going in that direction.”
Draper Speaks About Dogecoin and Elon Musk’s Critique of Bitcoin’s Energy Use
Draper then explained that he thinks merchants will flock to support BTC within the next few years. “Give it about a year and a half and retailers will all be on Open node, so everybody will accept bitcoin,” Draper stressed. “Then beyond that, I think [bitcoin] continues up because there are only 21 million of them,” the venture capitalist added.
The executive also touched upon dogecoin (DOGE) during his interview and explained that there has to be something that makes the public like the dog token.
“There must be something to dogecoin because it makes us all smile but no engineers are working on it,” Draper said. “Doge devs to improve system transaction efficiency. Potentially promising. I tend to focus on the ones where people are dedicating their lives to improving the currency.”
Draper told CNBC he thinks bitcoin will be the center of financial activity worldwide for a long time and described BTC as one of the world’s tech giants. “[Bitcoin] is sort of like Microsoft [in] the software world or Amazon in the e-commerce world,” Draper remarked.
Furthermore, before Draper made his prediction the venture capitalist spoke about Elon Musk and Tesla’s critique of Bitcoin’s energy use. He commended Musk for what he had previously accomplished but in terms of understanding bitcoin’s energy consumption, Draper thinks he’s wrong.
“Elon, first of all, is one of the most brilliant men in the world…maybe the most brilliant, [but] he got this one wrong,” Draper said.
Bitcoin Remittances to El Salvador Surge 300% Ahead of BTC Becoming Legal Tender
Bitcoin remittances to El Salvador jumped more than fourfold in May from the previous year, according to data from blockchain analytics firm Chainalysis.
Last week, El Salvador passed a bill making bitcoin legal tender in the country alongside the U.S. dollar.
The monthly bitcoin transfers of under $1,000 to El Salvador totaled $1.7 million in May, representing more than a 300 percent increase from $424,000 the previous year, Reuters reported, citing data from blockchain analytics firm Chainalysis.
The monthly bitcoin transfers to the country peaked in March at $2.5 million. While remittances using bitcoin have soared, they are still a small portion of total remittances to the country.
According to the World Bank, remittances using traditional money totaled nearly $6 billion in 2019, and about 95 percent of total remittances in the first quarter of this year came from Salvadorans working in the U.S.
El Salvador became the first country in the world to make bitcoin legal tender when its congress passed President Nayib Bukele’s bitcoin bill last week.
The country is now focusing on bitcoin mining using energy from volcanoes, which aims to be “very cheap, 100% clean, 100% renewable” and with “0 emissions.”
Several organizations have voiced concerns over El Salvador’s move to make bitcoin legal tender, including the International Monetary Fund (IMF) which warned the country of legal and economic issues last week.
Rating agency Moody’s said last week that El Salvador’s bitcoin law “carries risks for the financial system, the stability of the country’s monetary regime and signals a lack of a coherent economic framework.”
Meanwhile, an official with the Bank of International Settlement (BIS) called the bitcoin law in El Salvador an “interesting experiment” but said it did not change the bank’s approach to cryptocurrency.
The president of the European Central Bank (ECB), Christine Lagarde, similarly said the ECB’s policy is unaffected by El Salvador’s bitcoin law.
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