Bitcoin was held near its lowest level in more than two months on Friday and was on its way to its worst week since February, while Dogecoin jumped a fifth as tweets from Tesla CEO Elon Musk put the two cryptocurrencies on a wild ride sent.
Markets have turned into Musk tweets for months since his interest in Dogecoin sparked a hundredfold rally in previously ignored token value this year, while Tesla’s $ 1.5 billion Bitcoin purchase helped that it went over $ 50,000 in February.
In an equally surprising U-turn this week, it hit the world’s largest cryptocurrency after announcing Tesla will no longer accept Bitcoin as payment due to environmental concerns, which worries investors about Musk’s impact on crypto prices.
Bitcoin is down almost 15% this week to $ 49,804.
Dogecoin is down about a third since last Friday after Musk spoke of a “hustle and bustle” live on Saturday night. It rose 20% after his recent comments that he was involved in work to improve his efficiency.
“Work with Doge developers to improve system transaction efficiency. Potentially promising,” Musk said on Twitter, increasing Dogecoin on the Binance exchange from about $ 0.43 to $ 0.52.
It is unclear whether Musk is referring to efficiency in terms of energy use, ease of use, or currency fitness, said Mark Humphery-Jenner, associate professor of finance at the University of New South Wales Business School in Sydney.
Dogecoin uses 0.12 kilowatt-hours of electricity per transaction compared to 707 for Bitcoin, according to data center provider TRG, but it’s nearly impossible to use it to buy anything.
Almost worthless by the end of 2020, Dogecoin is the latest darling of a frenzied crypto market that began last year when institutional investors announced big Bitcoin purchases.
According to CoinMarketCap.com, it has become the fourth largest cryptocurrency by market capitalization. The second largest ether in cryptocurrency has also risen more than 400% this year. It was last at $ 3,865, stable for the week so far.
The big strides have begun to instill regulatory scrutiny, and a Bloomberg report on Thursday that found Binance in the US is under investigation by the US judiciary added price pressure on cryptos this week.
Musk’s tweets and market reaction could also attract attention, said Edward Moya, an analyst at brokarage OANDA.
“Tesla is drawing a tremendous test for Musk’s cheerleading from Bitcoin,” he said. “If Tesla reveals a bet on Dogecoin, regulators may have an eye on Musk.”
However, others say the market could be more like an old-fashioned bubble.
“Dogecoin remains a lesson in the bigger fool theory,” said David Kimberley, an analyst at Investing App Freetrade, who believes that buying overpriced assets can be profitable as long as there is a “bigger fool” to turn them into higher and higher Prices buys.
“It’s pumped by people who want to get rich quick (and Elon Musk),” he said.
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