| 6 December 2022, Tuesday |

Bitcoin hits three-month low as Musk drives investors to exit

Bitcoin fell to a three-month low on Monday as investors sold cryptocurrencies in the wake of Tesla CEO Elon Musk’s weekend hint that the company is considering selling some of its bitcoin assets, or may have already done so.

Musk’s passion for crypto has boosted stocks, but he has recently roiled trade by appearing to cool on bitcoin in favor of its one-time spoof, dogecoin. Even the most hardened traders are being frightened by the gyrations.

On Monday, bitcoin dropped more than 9% to $42,185, its lowest since February 8, while ether, which is connected to the Ethereum blockchain, fell around 8% to $3,227.22. Dogecoin dropped nearly 7% to $0.48, and all three are far below recent highs.

Last week Musk said Tesla would stop taking bitcoin as payment, owing to environmental concerns about energy use to process transactions. Defending that decision on Sunday, he suggested Tesla may have sold its own holdings.

In response to an unverified Twitter account called @CryptoWhale, which said: “Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him…,” Musk wrote: “Indeed”.

It is not clear whether he was confirming sales or whether he referred only to the fact that he had faced criticism.

Last week Musk said Tesla would not sell its bitcoin, but the cryptocurrency has dropped by almost a quarter since Musk’s reversal on Tesla taking it as payment.

Dogecoin is also yet to fully recover from Musk describing it as a “hustle,” although he did boost the price last week by saying he was working to improve its efficiency.

For an asset class that has surged this year, with dogecoin up about a hundredfold, ether up more than fourfold and bitcoin gaining 45%, some are beginning to call time on the wild ride.

“Our weekend trading has kicked up, and we’re looking at some serious liquidations through the exchanges,” said Chris Weston of brokerage Pepperstone in Melbourne.

“I am closing the short-bitcoin/long-Ethereum trade and moving to the sidelines, as I feel the dust really needs to settle here,” he said.

  • Reuters