Bitcoin’s ‘entire story falling apart’ ‒ expert’s ‘devastating’ warning before Musk tweet | City & Business | Finance
Elon Musk announces suspension of Bitcoin Tesla purchases
The price of Bitcoin dropped 10 percent after Tesla CEO Elon Musk tweeted that the carmaker would U-turn on its decision to allow Bitcoin to be used to purchase its vehicles. Mr Musk cited concerns over the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions” as the reason for suspending the payment method. The cryptocurrency’s price dropped as low as $46,000 (£33,000) overnight and has bounced back slightly today to $50,242 (35,725).
But investment expert Oliver Renick did warn that a sell-off was coming earlier this week.
He said: “If Bitcoin doesn’t rally when stocks are under pressure due (now), it will likely set off an excruciating downtrend as king crypto’s mythos unravels and people come to terms with what it’s likely been about all along – selling to the next guy.
“A lot of people have infamously written ‘Bitcoin is dead’ articles. Not me.
“I’ve written about why most people don’t need Bitcoin, about why the evidence is overwhelming that Bitcoin trades as a speculative asset, but I’ve always left room for the possibility of the seemingly impossible – that Bitcoin will one day make a miraculous metamorphosis from a get-rich-quick trade to an inflationary hedge.
Musk sent the price of Bitcoin plummeting last night
Bitcoin’s price fell 10 percent
“Bitcoin has utility in its role as a censorship-resistant means of money transfer, but many cryptos can accomplish this goal.
“It’s the gold story that’s been the secret to its success. ‘Digital gold’ is the easiest catchphrase to remember, repeat, and fits with the financial narrative du’jour of the money-printing generation.”
Today, the price of gold is driven by demand for the precious metal, the amount held in the central bank reserves, the value of a currency against it and the desire to hold gold as a hedge against inflation and currency devaluation.
But Mr Renick, who is the host of Morning Trade Live and Market On Close, says Bitcoin cannot say the same about itself.
He added: ”Bitcoin has been the most successful story because it’s been impossible to disprove – up until now.
READ MORE: Dogecoin dubbed ‘invaluable’ as Bitcoin slumps following Elon Musk’s tweet
Musk tweeted to his 54 million followers
“This is the moment everyone’s been waiting for. The Federal Reserve doesn’t give a damn about inflation, policymakers are dumping everything into the economy they can possibly come up with, and the most reliable stocks of the bull market are breaking down.
“We just had the biggest bond selloff in history a few months ago and the dollar is in a month-long freefall.
“Bitcoiners have never been more convinced that destiny is manifest, and many believe crypto canon calls for an extension of gains after last year’s block halving.
“Gold is finally rallying, but Bitcoin’s hit a wall.”
Incredibly, writing for Forbes on Monday, Mr Renick made a daunting prediction for Bitcoin.
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Musk asked his followers if they would pay in Dogecoin
He said: “If it sells off here, the entire story falls apart.
“I think it will. For one, as I showed mathematically last month, there is zero evidence that Bitcoin is evolving into anything like gold.
“Without the digital gold story, I don’t see how Bitcoin sustains any price level from recent history.
“If it doesn’t come to fruition ASAP, the subsequent collapse will bring a crypto winter that’ll bury the entire asset class for a very long time.”
This week’s announcement from Mr Musk prompted a $365billion (£260billion) sell-off in the crypto market.
It came just hours after he posted a poll to his 54 million followers asking: “Do you want Tesla to accept Doge?”
There has been a surge in interest in cryptocurrency
More than a million people voted within an hour of the poll going live, with more than three-quarters of them voting for Tesla to accept Dogecoin.
Britain’s Financial Conduct Authority (FCA) has previously warned investors of the risks that come with investing in cryptocurrency.
They said: “If consumers invest, they should be prepared to lose all their money.
“Some investments advertising high returns from crypto assets may not be subject to regulation beyond anti-money laundering.
“Significant price volatility, combined with the difficulties valuing [Bitcoin] reliably, place consumers at a high risk of losses.
Express.co.uk does not give financial advice. The journalists who worked on this article do not own Dogecoin or Bitcoin.