Bitcoin suddenly skyrockets in value after Elon Musk tweet

The price of bitcoin and many other cryptocurrencies shot up dramatically this morning after a single tweet from Tesla CEO Elon Musk.

Hold on to your butts crypto investors, the market is going wild once again after a single tweet from you know who.

Tesla CEO Elon Musk just can’t control himself and this morning he single-handedly sent the value of bitcoin and many other cryptocurrencies skyrocketing after taking to social media.

Earlier this month he poured cold water on the entire market by saying his electric car company would be backtracking on a promise to accept bitcoin as a form of payment, citing environmental concerns.

This is because bitcoin is created by “mining” – the process by which new bitcoins are entered into circulation – which uses a lot of computing power and energy.

Spoke with North American Bitcoin miners. They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising.

— Elon Musk (@elonmusk) May 24, 2021

Mr Musk previously cited concerns that much of this energy was coming from traditional fossil fuel resources – which isn’t a great look when you’re trying to sell electric cars.

However, this morning, Mr Musk has turned the crypto world on its head by simply mentioning that he had a conversation with some “North American Bitcoin miners” about where they get their energy from.

“Spoke with North American Bitcoin miners,” he said. “They committed to publish current & planned renewable usage & to ask miners WW (worldwide) to do so. Potentially promising.”

According to Coindesk, by early this morning the price of bitcoin had shot up by 17.12 per cent in the previous 24 hours, while etherereum had gone up by 29.51 per cent.

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The value of bitcoin shot up this morning. Picture: Coinbase

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This comes after bitcoin saw a calamitous drop in price since the record high of $81,961.56 on April 15 this year.

Rebalancing ‘healthy’ for crypto market

Some in the crypto community feel like last week’s crash is a rebalancing, needed for the market to move higher over the long term.

“The large falls in valuations seen this week are, in one way, healthy as they enable the market to clear excess speculative positions and consolidate before its next phase of expansion,” Anatoly Crachilov, the chief executive of investment manager Nickel Digital, told Forbes.

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It has been a rough old week for crypto investors. Picture: AFP

He pointed to bitcoin’s “122 per cent gain from the beginning of the year” through to April.

“We have seen this pattern time and again across multiple cycles and expect this to remain in place until the market matures and achieves a larger involvement of institutional capital,” he added.

Mr Crachilov is one of many investors who believe bitcoin and other currencies will bounce back.

Pete Humiston, manager of Kraken Intelligence, part of the US bitcoin and crypto exchange Kraken, said on Twitter that although the value of bitcoin had dropped, the funding rate had picked back up in the past few days.

Shorts are still paying longs...

But the #bitcoin funding rate has almost completely mean reverted up to 0%. 👀🐂🚀 pic.twitter.com/V1ND1qiBW5

— Pete Humiston (@1337_pete) May 22, 2021

He said this is a sign that the market is “resetting” – paving the way for a recovery.

However, other analysts are warning that cryptocurrencies could implode at any time, leaving everyday investors in a world of strife.

Crypto billionaire and founder of digital coin ethereum, Vitalik Buterin, said late last week he believed cryptocurrencies are in a bubble and it is “notoriously hard to predict” when it will pop.

“It could have ended already,” Mr Buterin said. “It could end months from now.

“We’ve had at least three of these big crypto bubbles so far. And often enough, the reason the bubbles end up stopping is because some event happens that just makes it clear that the technology isn’t there yet.”

Meanwhile, the ABC’s business editor Ian Verrender said investors should be “prepared to lose everything”.

“Bitcoin is a bubble,” he wrote in analysis piece. “While its value has risen exponentially in recent years, its incredible volatility makes it anything but a safe harbour. Given it isn’t much good for transactions and holds no proprietary technology or intellectual property, about the only thing it is good for is speculation.

“Who knows, it could go beyond $US100,000 [$A129,999] sometime in the near future. But if everyone suddenly decides to abide by the rules of economics and starts acting rationally, be prepared to lose everything.”