Bitcoin beelines for its worst week since February, dogecoin jumped nearly a quarter – all while the chief at Tesla sent cryptocoins on a wild adventure via his Twitter feed. Bitcoin is down roughly 13% as of this week, and was last up 1.6% at $50,503. This comes as a slump after hitting its record month last month of just under $65,000.
As Musk has tweeted for months, the cryptocurrency markets haven’t stopped moving. It seems his talk about dogecoin, a meme coin that began as a joke, has now seen giant growth and is scratching the surface of practical use.
Unfortunately for bitcoin lovers, Musk tweeted and announced that Tesla (TSLA.O) would discontinue the acceptance of the coin as payment as a result of ‘environmental concerns’. This lingering news could be a slight clue as to why bitcoin saw a drop.
“Toppy markets (are) looking for an excuse to breathe,” said Ben Sebley of crypto firm BCB Group. “Long money doesn’t care about Elon’s tweets. Fast money trades around that stuff now.”
According to CoinGecko, dogecoin saw a jump of nearly 25% after Musk’s latest tweet. Sitting at $0.52 most recently, with its record hit being last week at $0.73.
“Working with Doge devs to improve system transaction efficiency. Potentially promising,” Musk wrote on Thursday. He called it a “hustle” last week, knocking its price.
Mark Humphery-Jenner, associate professor of finance at the University of New South Wales, says it remains unclear if Musk is referring to efficiency in terms of energy, ease of use, or overall suitability as a currency.
Data center provider TRG reports that dogecoin consumes 0.12 kilowatt hours of electricity per transaction compared to bitcoin’s 707.
CoinMarketCap released that dogecoin surged to the fourth-largest cryptocurrency just this year with a total value of $68 billion. The token which was initiated as a joke, features a Shibu Inu pup. With an unlimited supply, there are only a few major companies that will accept the coin as a form of payment.
On the flipside of the coin, bitcoin’s gains for this year can be attributed partly to the growing mainstream adoption of its use for official payment. And the supply is rather limited.
“Dogecoin remains a lesson in greater fool theory,” said David Kimberley, analyst at investing app Freetrade, which posits that buying overpriced assets can be profitable, so long as there is a “greater fool” to buy them.