By Vildana Hajric and Katie Greifeld

What Elon Musk gives, he also takes away.

Bitcoin has erased any profits it made following Tesla Inc.’s February 8 announcement that it would use corporate funds to buy the digital asset and accept it as payment for its vehicles.

The world’s largest cryptocurrency has fallen around 40% from its record high of nearly $ 65,000, trading at $ 39,360 as of 6:36 a.m. in London, a level last seen before the EV maker made its investment announced.

The volatility is fueled by Tesla CEO Musk himself, who surprised crypto advocates last week by announcing that the company would no longer accept Bitcoin as a form of payment. Mood music darkened over the weekend, and Bitcoin fell about 15% as Musk doubled its criticism of the cryptocurrency’s environmental footprint.

On Tuesday, the People’s Bank of China issued a statement reiterating that digital tokens cannot be used as a means of payment and highlighting the regulatory risk associated with cryptocurrencies. That helped send Bitcoin back to pre-February. 8 levels.

Bloomberg“These huge swings in crypto underscore the speculative nature of crypto as an asset,” said Fiona Cincotta, senior financial markets analyst at City Index. “It’s not the first time we have Elon Musk, who trades and causes trouble in the crypto world, and I can’t imagine it will be the last.”

Musk has become a Svengali-like character in the crypto world with his often cryptic Twitter posts that can move billions. Bitcoin started a multi-month rally following Tesla’s announcement in February, peaking at $ 64,870, in large part due to the company’s adoption of the coin.

Extinguished

At the time, Tesla’s adoption was being referred to as a turning point by many in the crypto sector, who viewed this as another step in the asset’s evolution.

Everything that was obliterated after Musk upset investors after a slew of tense tweets that began last week when he criticized Bitcoin’s energy usage.

He announced that Tesla would stop buying a car with the token and called recent energy consumption trends “insane.” Over the weekend, after alleging that his EV company may have sold its Bitcoin holdings, he sent out tweets clarifying that it had not. All of this left the traders confused.

“I don’t think his comments make it a more serious asset class. People look at it and think it’s just a fad, it’s got too much attention in popular culture, ”said David Bianco, chief investment officer for America at DWS Group. “Professional investors don’t want to hear the talk of investing on Saturday Night Live.”

– With the support of Claire Ballentine and Joanna Ossinger.