Bitcoin Soars after Elon Musk Softens His Stance
Monday saw the price of Bitcoin rally, reaching almost $40,400 by the end of the day. The jump in price flowed comments made by Tesla CEO Elon Musk as well as hedge fund manager Paul Tudor Jones.
In response to comments made over the weekend, Musk suggested that if mining Bitcoin would rely on 50 percent clean energy, the company would once again accept Bitcoin for the purchase of the company’s electric vehicles.
Guesting on CNBC’s “Squawk Box,” Tudor Jones stated his affection for Bitcoin as a portfolio diversifier. When asked, Tudor Jones said he knows one thing for certain, he wants 5 percent in gold, 5 percent in cash, 5 percent in commodities, and 5 percent in Bitcoin.
Early Sunday trading in Bitcoin started at $34,880. By early Monday, after the market digested the remarks made by Tudor Jones and Musk, Bitcoin price jumped above $40,000. Although Bitcoin eventually was off the day’s high, it was nevertheless up well over five percent in 24 hours. As of Tuesday morning in Asia, Bitcoin has recovered to $40,377, according to Coinbase.
Since the start of 2021, Bitcoin has gone through numerous wild swings, however, the price has surged by more than 30 percent. Bitcoin reached an all-time high of $64, 800 plus in April. After a 30 percent intraday crash, Bitcoin hit a low of almost $30,000 in May.
Investors Interest in Bitcoin Has Grown
The most recent Bitcoin bull run appears to have been fueled by an anticipated increase in inflation as well as the crypto as a store of value. During the spring, Tudor Jones noted during a CNBC interview that he was holding almost two percent of his assets in Bitcoin. Since this announcement, other outspoken Bitcoin enthusiasts such as Bill Miller and Stanley Druckenmiller have added to the dialogue.
Seeking to offer cryptocurrency services for their customer base, major custodial banks such as Bank of New York Mellon and State Street Bank rode the momentum. Major financial institutions, including Morgan Stanley, Goldman Sachs, and BlackRock were trying to determine how they could offer their clients exposure to Bitcoin as well. In the past, investment institutions put themselves at significant risk by introducing Bitcoin into their portfolios.
Tudor Jones sees Bitcoin as a great diversifier. When asked, he said, “For me, it is a way of looking at protecting wealth over time.” He added, “Bitcoin is a great diversifier, it is a story of wealth, as is crypto, others, however, argue that crypto is a whole different ecosystem, being transactional by nature.
Shortly after Tudor Jones made these comments, the price of Bitcoin went up a further $700.
Musk’s Comments Boosted Bitcoin Price
Gains in the price of Bitcoin over the weekend came on the heels of Elon Musk announcing Tesla’s resumption of accepting Bitcoin. However, he did note a caveat. There must be confirmation of about 50 percent clean energy usage by Bitcoin miners, and there must be a positive future trend.
Musk put an end to purchasing Tesla vehicles with Bitcoin in mid-May, noting his concern over the detrimental impact of crypt mining. Tudor Jones somewhat mimicked Musk’s concern when he said on Monday that if he were king of the world, Bitcoin mining would be banned in its entirety.
Bitcoin Mining Requires Energy, and Lots of it
Massive amounts of energy are needed to mine Crypto. To fuel the computers used, it is estimated that mining Bitcoin uses more energy than countries such as Finland and Belgium, this statistic is in accordance with a consumption index maintained by the University of Cambridge.
The rapid increase in Bitcoin price over the weekend is one more example of how the market moves when Elon Musk makes a comment.
In May, Musk tweeted that Tesla was suspending vehicle purchases using Bitcoin. As a result, billions of dollars were wiped off the crypto market. Not only do Musk’s comments impact crypto, but past tweets he has made are also linked to moves in the stock market as well.
Bitcoin Mining is Under Environmental Scrutiny
The environmental impact of Bitcoin mining is under considerable scrutiny. Chinese Vice Premier Lie He picked up the cudgels, saying a crack-down on Bitcoin mining operations was necessary.
It is not only China that is cracking down. The Government in Tehran announced a ban on Bitcoin through the middle of September siting blackouts in the country’s capital, as well as several other large centers of population. The ban is due in part to the huge amount of electricity needed to perform the activity.