Bitcoin Dropped 11%, That’s Common

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New York, – The price of bitcoin fell 11% again to around US $ 48,000 after US Treasury Secretary Janet Yellen warned investors about the dangers of bitcoin, Tuesday local time (23/2/2021). Tesla CEO Elon Musk, who is also a major bitcoin investor, said the digital currency was too expensive.

Bitcoin movements fluctuate in the range of US $ 45,000-US $ 48,000. Other cryptocurrencies were also under pressure, such as Ether which fell 11% to US $ 1,573 and XRP down 17% to 47 cents.

For bitcoin, this kind of volatility is common. Bitcoin has strengthened 360% in the past year, or 60% since the beginning of the year. Bitcoin has also dropped 80% in a year.

Yellen warned investors of the instability and legitimacy of bitcoin’s still in doubt.

“In my opinion, bitcoin is not used as a broad transaction mechanism. I am concerned that bitcoin is more often used to fund illegal transactions. Bitcoin is also very inefficient as a transaction tool, not to mention the amount of energy used to process these transactions,” Yellen told CNBC .

The mining process of bitcoin by miners around the world uses a computer network and consumes a very large amount of energy, equivalent to New Zealand’s carbon emissions, or greater than Pakistan’s electricity consumption.

Elon Musk announced on February 8 that his company has purchased US $ 1.5 billion worth of bitcoins and will begin accepting payments in bitcoin. This boosted bitcoin soaring and increasing Tesla’s exposure to bitcoin volatility. In stock trading Tuesday, Tesla briefly plunged 13% before trimming some of its losses and finally closing down 2.2%.

On February 20, Musk said via Twitter that the prices of bitcoin and ethereum appear to be high. This statement generated negative sentiment towards bitcoin, and indirectly on the movement of Tesla shares.

The price of bitcoin broke through the range of US $ 55,000 on Friday (19/2/2021), thus carving a record market capitalization of US $ 1 trillion, equivalent to Indonesia’s Gross Domestic Product (GDP). Bitcoin is often compared to gold because of its limited supply. Bitcoin production or mining is stuck at 21 million units, while currently around 18.5 million units have been mined.


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