Bitcoin jumps after Musk says Tesla could use it again

Published June 14, 2021
Representations of virtual currency Bitcoin are seen in front of the Tesla logo in this illustration taken, February 9. — Reuters
Representations of virtual currency Bitcoin are seen in front of the Tesla logo in this illustration taken, February 9. — Reuters

Bitcoin hit a two-week peak just shy of $40,000 on Monday, after another weekend reacting to tweets from Tesla boss Elon Musk, who fended off criticism over his market influence and said Tesla sold Bitcoin but may resume transactions using it.

Bitcoin has gyrated to Musk's views for months since Tesla announced a $1.5 billion Bitcoin purchase in February and said it would take the cryptocurrency in payment. He later said the electric car maker would not accept Bitcoin due to concerns over how mining the currency requires high energy use and contributes to climate change.

"When there's confirmation of reasonable (~50 per cent) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions," Musk said on Twitter on Sunday.

Bitcoin rallied more than 9pc after that message, breaking above its 20-day moving average, and it climbed a tiny bit further in Asia to hit $39,838.92.

"The market had been going through another round of correction over the weekend ... until Elon Musk's tweet of accepting Bitcoin again for Tesla purchases changed sentiment," said Bobby Ong, co-founder of crypto analytics website CoinGecko.

He said the market was also supported by software company and major Bitcoin-backer MicroStrategy raising half a billion dollars to buy Bitcoin.

Bitcoin is up about 33pc this year but has collapsed from a record peak above $60,000 amid a regulatory crackdown in China and Musk's apparently wavering enthusiasm for it. Telsa stock is down about 30pc since the company's Bitcoin purchase.

Musk's tweet was made in response to an article based on remarks from Magda Wierzycka, head of cybersecurity firm Syngia, who in a radio interview last week accused him of "price manipulation" and selling a "big part" of his exposure.

"This is inaccurate," Musk said. "Tesla only sold ~10pc of holdings to confirm Bitcoin could be liquidated easily without moving market."

Musk had tweeted in May that Tesla "will not be selling any Bitcoin" and "has not sold any Bitcoin," but investors are keenly awaiting Tesla's next earnings update — due next month — for any disclosure of changes to its position.

Musk has taken issue with the vast computing power required to process Bitcoin transactions and in early June posted messages appearing to lament a breakup with Bitcoin.

Other cryptocurrencies were steady after weekend gains, with Ether at $2,491 and one-time Musk darling Dogecoin buying about 32 US cents on crypto exchange Binance.

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