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The price of Bitcoin fell further on Tuesday after U.S. Treasury Secretary Janet Yellen issued a warning about the cryptocurrency.
The world’s most valuable digital currency fell 16% in the past 24 hours and sank below $ 50,000 to trade up to $ 45,389 at 4:10 p.m., according to Coin Metrics data.
On Monday, Yellen called Bitcoin an “extremely inefficient way to conduct transactions” and warned of its use in illicit activities. The alarm also sounded about the impact of Bitcoin on the environment. The wild rise in the token has reminded some critics of the high level of electricity needed to produce new coins.
Bitcoin is not controlled by any central authority. The so-called miners work with high-powered machines that compete to solve complex mathematical puzzles in order to pass a transaction. The Bitcoin network consumes more electricity than Pakistan, according to an online tool from researchers at Cambridge University.
Yellen also warned Monday about the risks of investing bitcoin in retail investors.
“It’s a very speculative asset and you know I think people should be aware that it can be extremely volatile and I’m concerned about the potential losses that investors may suffer,” former Federal Reserve Chairman Andrew Ross Sorkin of CNBC at a New York Times DealBook Conference.
Bitcoin has continued to rise by more than 60% since the beginning of the year, and price changes of more than 10% are not uncommon in the crypto markets. Bitcoin once rose to nearly $ 20,000 in 2017 before launching 80% of its value the following year.
The digital currency hit a $ 1 trillion market value for the first time last week, though it has now sunk below $ 900 billion, according to CoinDesk. It has gained momentum from news about Wall Street banks and big companies like Tesla and Mastercard heating up cryptocurrencies.
Tesla CEO Elon Musk said over the weekend that the prices of rival bitcoin and symbolic ether “seem high.” It comes after Tesla’s announcement earlier this month that it had bought bitcoin worth $ 1.5 billion. Tesla shares suffered the last drop since Monday, September 23, 2020.
Bitcoin has been strong by major investors, in part because of the perception that it is a value similar to gold. Bullish investors claim that cryptocurrency can act as a protection against rising inflation.
But skeptics warn that bitcoin has no intrinsic value and is one of the biggest market bubbles in history. JPMorgan analysts last week said Bitcoin was an “economic spectacle” and that cryptocurrency assets are classified as the “poorest hedge” in the face of significant declines in stocks.