Elon Musk Tweet Prompts Bitcoin Selloff -- 2nd Update

By Caitlin Ostroff 

Bitcoin continued to be under some pressure after a tweet from Tesla Inc. Chief Executive Elon Musk prompted speculation that the electric-car maker had sold, or would sell, its holdings of the cryptocurrency.

While Mr. Musk later tweeted that Tesla hadn't sold any bitcoin, the selloff demonstrated his power to shift cryptocurrency markets. Last week, he said Tesla had suspended accepting bitcoin as payment for its vehicles, citing concerns over its carbon footprint. Since then, the market value of bitcoin has fallen to about $835 billion from more than $1 trillion.

Bitcoin traded as low as $42,102.35 overnight -- before rebounding Monday afternoon to $44,843.38. It is down about 30% from its record approaching $65,000 a month ago.

Mr. Musk's recent posts on Twitter have shown that his sentiments are having a significant impact on the market, said Chris Bendiksen, head of research at London-based asset management firm CoinShares.

"It's a little too much for my liking," he said.

The Tesla chief has long been a prolific tweeter regarding cryptocurrencies, sharing memes and posts about the joke cryptocurrency dogecoin.

Earlier this year, Tesla said it added $1.5 billion worth of bitcoin to its corporate treasury.

The company sold $272 million worth of bitcoin in the first quarter, helping it report record earnings.

The attention on bitcoin from Mr. Musk likely helped usher new individual investors to buy it, investors and analysts say.

Those traders might be more likely to sell based on Mr. Musk's tweets, increasing volatility.

Write to Caitlin Ostroff at [e-mail]

(END) Dow Jones Newswires

May 17, 2021 18:11 ET (22:11 GMT)

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