According to data from Coin Metrics, the world’s most valuable digital coin has plunged 16% in the past 24 hours, dropping below $ 50,000 for a trade as low as $ 45,389 at 4:10 am ET.
On Monday, Yellen called bitcoin “an extremely inefficient way to conduct transactions” and warned against its use in illicit activities. It has also sounded the alarm on Bitcoin’s impact on the environment. The token’s surge has reminded some critics of the level of electricity needed to produce new coins.
Bitcoin is not controlled by any central authority. The so-called miners use high powered machines that compete with each other to solve complex mathematical puzzles in order to complete a transaction. Bitcoin’s network consumes more electricity than Pakistan, according to an online tool from researchers at the University of Cambridge.
Yellen also warned on Monday of the risks of investing in bitcoin for retail investors.
“It is a highly speculative asset and you know I think people should be aware that it can be extremely volatile and I am concerned about the potential losses that investors may take,” said the former chairman of the Federal Reserve to CNBC’s Andrew Ross Sorkin in a New York Times dealbook. conference.
Bitcoin is still up over 60% year-to-date, and price swings of over 10% are not a rarity in the crypto markets. Bitcoin has already climbed to nearly $ 20,000 in 2017 before losing 80% of its value the following year.
The digital coin hit $ 1 trillion in market value for the first time last week – although it has now fallen below $ 900 billion, according to CoinDesk. It was boosted by news from Wall Street banks and big companies like Tesla and Mastercard that have turned to cryptocurrencies.
Tesla CEO Elon Musk said over the weekend that bitcoin and rival token ether prices “appear high”. It comes after Tesla announced earlier this month that it had purchased $ 1.5 billion worth of bitcoin. Tesla shares suffered their biggest drop since September 23, 2020 on Monday.
Bitcoin has caught the attention of mainstream investors, in part because of the perception that it is a store of value similar to gold. Bullish investors claim that cryptocurrency can act as a hedge against rising inflation.
But skeptics warn that bitcoin has no intrinsic value and is one of the largest market bubbles in history. Last week, analysts at JPMorgan said bitcoin was an “economic sideline” and crypto assets ranked as the “poorest hedge” against a significant drop in stocks.