That was the mad rush Bitcoin took to investors on Wednesday, making billions of dollars before comments from some prominent supporters helped propel it onto a scorching rebound.
The extreme price swings of an asset known for its turbulence caused blackouts on major crypto exchanges and dominated the chatter on Wall Street. The uproar sparked a tweet from Elon Musk implying that Tesla Inc. was not among the sellers, while Cathie Wood said her monitors had initiated a “capitulation” which put the digital token “on sale.” Justin Sun, a tech entrepreneur who founded the Tron cryptocurrency platform, tweeted that he bought $ 152 million in Bitcoin for around $ 37,000 a coin.
At less than $ 30,000 just after 9 a.m. in New York City, the coin narrowed its loss to 7% and briefly exceeded $ 40,000 by 1 p.m. It was down 9.7% near $ 39,300 by 4:30 p.m. Ether, the second largest coin, sank over 40% before halving it.
“The history of these assets has been littered with aggressive rallies and sickening sales,” said Stéphane Ouellette, Managing Director and Co-Founder of FRNT Financial.
They rarely occur in one session. Volatility dominated Wall Street on a day when stocks and commodities were also under pressure and the Federal Reserve was set to release the minutes of its last meeting. The rampant sales have caused blackouts on some of the biggest exchanges, from Coinbase Global Inc. to Binance. #Cryptotrading was all the rage on Twitter, where critics and fans alike disagreed over the rout.
Tesla CEO Musk sparked the wild moves last week. Bitcoin plunged when he announced the automaker would not take it as a payment, but then reversed when he said the company had no plans to sell its crypto holdings. He appeared to be hinting in a tweet on Wednesday that Tesla isn’t selling in the rout.
Tesla a 💎 🙌
– Elon Musk (@elonmusk) May 19, 2021
Volatility erupted in crypto-land last week when Musk retracted his intention to accept Bitcoin for his company’s cars. The sale resumed over the weekend when the CEO of Mercurial appeared to suggest that Tesla might want to sell its stakes, but reversed after tweeting that the automaker had no plans to do so. A statement from the People’s Bank of China reiterating on Tuesday that digital tokens cannot be used as a payment method added to the sale.
While all of them were the immediate causes of the rout, nothing could explain the frantic rout on Wednesday morning, when the coin plummeted by thousands of dollars in a matter of minutes. The selloff gave way to more selling as investors lured into crypto looking for quick cash for exits. The sale accelerated when Bitcoin fell below its average price over the past 200 days.
Chart watchers pointed to key technical indicators when the coin sold. Bitcoin has rebounded above the $ 30,000 level and many are waiting to see if it can get back above its 200 day moving average line. If not, he could potentially retest Wednesday’s lows.
Cryptocurrency-related stocks also fell, with Coinbase shares dropping nearly 13% at one point and Marathon Digital Holdings Inc. by 16%.
Bitcoin had embarked on a rally lasting several months after Tesla’s announcement in February, peaking at $ 64,870, largely thanks to the company’s adoption.
At the time, Tesla’s acceptance was hailed as a defining moment for the coin, with many in the crypto world seeing it as a further step in its evolution.
All that has been erased as a result of Musk’s breathtaking tweets.
“Realistically, this isn’t the first time Elon Musk’s tweets have been erratic and, frankly, wrong,” said Ulrik Lykke, executive director of crypto hedge fund ARK36. “Crypto markets are extremely emotionally motivated and their participants are prone to overreact to events they perceive to be negative.”