Tag: Bitcoin news

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SAN SALVADOR: Facing resistance from the World Bank, IMF and opposition parties to his move to make bitcoin legal tender in El Salvador, President Nayib Bukele has promised $30 for each citizen who adopts the cryptocurrency.

Initiated by Bukele, El Salvador’s parliament approved a law this month to allow the crypto money to be accepted as tender for all goods and services in the small Central American nation, along with the US dollar, its national currency.

The crypto money will become legal tender in September.

Bukele said that in a bid to boost its wide adoption, each citizen who opens an electronic bitcoin “wallet” named Chivo will have the equivalent of $30 uploaded to their account.

“It will be a gift,” Bukele told national television late Thursday. “Just download and register and you will receive the bitcoin equivalent of $30 to use.”

Bukele did not specify where the money would come from.

He said more than 50,000 people in the country of 6.5 million were already using bitcoin.

On Twitter, the president also accused the opposition of trying to “sow fear” among Salvadorans about the bitcoin law.

He gave an assurance that use of the cryptocurrency will be optional, and wages and pensions in the country will continue to be paid in US dollars.

Bukele has touted the move as a way to make it cheaper and easier for Salvadorans abroad — some 1.5 million, mainly in the United States — to send money back home in the form of remittances, which represent almost a quarter of the country’s GDP.

According to World Bank data, El Salvador received more than $5.9 billion in 2020 from nationals living abroad.

But opposition parties have said the plan is “unworkable” and experts and regulators have highlighted concerns about the currency’s notorious volatility and the lack of protections for its users.

On Tuesday, the cryptocurrency fell beneath $30,000 for the first time in five months. At its highest, bitcoin was worth more than $63,000 in April.

Last week, the World Bank rejected a request from El Salvador for assistance in its bid to adopt bitcoin as a currency, citing “environmental and transparency shortcomings”.

The IMF has also flagged concerns, with spokesman Gerry Rice telling reporters El Salvador’s move “raises a number of macroeconomic, financial and legal issues that require careful analysis.”

The Central American Bank for Economic Integration (CABEI) has said it will provide technical assistance for El Salvador to regulate the use of bitcoin.

On Thursday, the first bitcoin teller machine was opened in the capital San Salvador, where people can deposit dollars in cash into their bitcoin wallet.

The country’s only other bitcoin machine is in the coastal town of El Zonte, where hundreds of businesses and individuals use the cryptocurrency for everything from paying utilities bills to haircuts or buying a can of soda.



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Once an admirer, Nassim Taleb now says Bitcoin is worth zero, BFSI News, ET BFSI

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MUMBAI: Naseem Taleb, renowned author of highly-regarded books such as Black Swan and Skin in the Game, believes that the true value of a Bitcoin is no higher than a zero.

In a paper titled ‘Bitcoin, Currencies and Bubbles’, Taleb said: “In its current version, in spite of the hype, Bitcoin failed to satisfy the notion of ‘currency without government’ (it proved to not even be a currency at all).

The noted author said that Bitcoin can neither be a short-term or long-term store of value, cannot operate as a reliable hedge against inflation, and “worst of all does not constitute, not even remotely, a tail protection vehicle for catastrophic episodes”.

The former admirer of the cryptocurrency asserted that the true value of a Bitcoin is no higher than zero. “Gold and other precious metals are largely maintenance free, do not degrade over a historical horizon, and do not require maintenance to refresh their physical properties over time. Cryptocurrencies require a sustained amount of interest in them,” Taleb wrote in his paper.

After a trailblazing run for much of 2020 and better part of 2021 so far, Bitcoin has undergone a sharp fall over the past two months triggered by China’s crackdown on cryptocurrency miners and backlash from famous enthusiast Tesla Founder Elon Musk.

After hitting a record high of $62,741 in April, Bitcoin has given up more than 50 per cent over the past two months and is now vulnerable to falling closer to its high hit during the 2017-18 bull market of around $19,000.

The surge in the price of the cryptocurrency over the past 14 months had largely been driven by new interest institutional investors such as hedge funds and certain corporations like Tesla and MicroStrategy.

Much of the interest in the coin from institutional investors rested on the notion that Bitcoin can act as a true hedge against inflation, better even then gold in some opinions. Taleb believes that for a currency to be a hedge against inflation it should have minimum variance against a basket of goods and services, a quality Bitcoin lacks.

Taleb’s paper is likely to further ignite debate in the global investment world on the true role of Bitcoin and other cryptocurrencies. In India, cryto enthusiasts often call Bitcoin an asset, not a currency. If that is the case, Taleb’s paper may give them a headache.



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Bitcoin hits nearly 2-week low in wake of China crackdown, BFSI News, ET BFSI

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LONDON/TOKYO: Bitcoin tumbled as much as 9% on Monday as recent volatility in the cryptocurrency market showed no signs of dampening down, with market players citing thin liquidity and China’s expanding crackdown on bitcoin mining.

Bitcoin fell as low as $32,288, its lowest in 12 days, and was last down 7.5%. If sustained, the drop would be its biggest in around a month.

Authorities in the southwest province of Sichuan on Friday ordered cryptocurrency mining projects to close. The State Council, China’s cabinet, last month vowed to clamp down on bitcoin mining and trading as part of a series of measures to control financial risks.

“Crackdown on Chinese miners might mean that they are offloading coin into a thin market and taking us lower,” said Ben Sebley of London-based crypto firm BCB Group.

Production of bitcoin in China accounts for more than half of global bitcoin production. Sichuan is China’s second-biggest bitcoin mining province, according to data compiled by the University of Cambridge. Some miners shift production there in the rainy summer to take advantage of its rich hydropower resources.

Companies that mine bitcoin typically hold large inventories of the cryptocurrency, with any moves to sell large amounts depressing prices.

Bitcoin has dropped by over a fifth in the last six days, and is down by half from its April peak of just shy of $65,000. Still, it has gained over 10% this year.

Smaller rival ether, the second-biggest cryptocurrency by market capitalisation that tends to move in tandem with bitcoin, dropped as much as 12%, falling below $2,000 for the first time in almost a month. It was last down 10% at $2025.31.



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SEC delays ruling on Bitcoin ETF in blow to crypto traders, BFSI News, ET BFSI

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US regulators have once again punted their decision on whether to approve a Bitcoin ETF.

The Securities and Exchange Commission said in a Wednesday regulatory filing that it will seek more public comment on a proposal to list a product on Cboe Global Markets Inc. It’s not the first time this year that the SEC has delayed giving an answer to the legions of crypto advocates pushing for a way to trade the largest cryptocurrency in an exchange-traded fund format.

Crypto enthusiasts have long been frustrated by the agency’s reluctance to sign-off on a Bitcoin ETF, a product that could catapult the world’s most valuable digital token into the mainstream among institutional investors.

There were predictions earlier this year that the regulator would be more receptive under SEC Chair Gary Gensler, who once taught classes on digital assets at the Massachusetts Institute of Technology. But since he took the reins in April, the agency has continued to express concerns that crypto exchanges lack oversight. And it has laid out fresh warnings about the risks of mutual funds investing in Bitcoin futures.

As part of Wednesday’s announcement, the SEC asked the public to weigh in on aspects of the Cboe proposal, which seeks approval of a VanEck Associates Corp. ETF. The SEC set deadlines into July and perhaps even August for people to respond. Here are some of the agency’s key questions:

  • Whether the trust and shares associated with the ETF would be susceptible to manipulation?
  • Whether Cboe’s plan is set up to prevent fraud and manipulation?
  • How transparent is Bitcoin?
  • Has regulation of the Bitcoin market changed substantially in the past five years?
  • What views do commentators have on the size and regulation of CME’s Bitcoin futures contracts?

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World Bank rejects El Salvador request for help on Bitcoin implementation, BFSI News, ET BFSI

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The World Bank said on Wednesday it could not assist El Salvador‘s bitcoin implementation given environmental and transparency drawbacks.

“We are committed to helping El Salvador in numerous ways including for currency transparency and regulatory processes,” said a World Bank spokesperson via email.

“While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings.”

Earlier on Wednesday, Salvadoran Finance Minister Alejandro Zelaya said the Central America country had sought technical assistance from the Bank as it seeks to use bitcoin as a parallel legal tender alongside the U.S. dollar.

El Salvador’s government did not immediately respond to a request from Reuters regarding the World Bank’s decision.

The minister also said ongoing negotiations with the International Monetary Fund had been successful, although the IMF said last week it saw “macroeconomic, financial and legal issues” with the country’s adoption of bitcoin.

Zelaya said on Wednesday the IMF was “not against” the bitcoin implementation. The IMF did not respond to a request for comment.

Investors have recently demanded higher premiums to hold Salvadoran debt, on growing concerns over the completion of the IMF deal, key to patching budget gaps through 2023.

On Wednesday, bonds sold off across the curve, with the 2032 issue down more than 2 cents at 96.25 cents on the dollar. The spread of Salvadoran debt to U.S. Treasuries dipped to 705 basis points after hitting on Tuesday a four-month high of 725 bps.

“There is no fast track for a solution on an IMF program and even uncertainty on whether the bitcoin proposal is compatible with diplomatic U.S. (or) multilateral relations,” said Siobhan Morden, head of Latin America fixed-income strategy at Amherst Pierpont Securities in New York.

El Salvador this month became the first country to adopt bitcoin as legal tender, with President Nayib Bukele touting the cryptocurrency’s potential as a remittance currency for Salvadorans overseas.

This month, Bukele also pulled out of an anticorruption accord with the Organization of American States, which dismayed the U.S. government, as Washington looks to stem corruption in Central America as part of its immigration policy.

“The recognition of a ‘Bukele’ risk premium has probably done some permanent damage to investor sentiment,” Morden said in her client note.

The market may be focusing too much on the news headlines, however, and not enough on the possibility of a deal with the IMF, said Shamaila Khan, head of EM debt strategies at AllianceBernstein in New York.

“It is important for El Salvador to get the IMF program done. If it was lost on them, they wouldn’t have the conversations,” she said.

“Our view is too much risk is priced in at these levels.”



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Bitcoin still being called a bubble after May’s 35% crash, BFSI News, ET BFSI

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By Ksenia Galouchko

The view that Bitcoin is a hallmark of speculative excess and froth is still going strong, even after last month’s 35% plunge.

About 80% of fund managers surveyed by Bank of America Corp. called the market a bubble, up from 75% in May. The poll, which captures the view of 207 investors with $645 billion in assets, said “long Bitcoin” is the second-most crowded trade after commodities.

The results point to a skepticism among some professional managers about whether crypto is a viable asset class, given its extreme volatility and regulatory uncertainty. Bubble fears are nothing new for cryptocurrencies, and plenty of investors have voiced doubts over the wisdom of wading into an asset that has no fundamental underpinning.

Even though prices have tumbled, investment banks are still embracing the emerging asset class. Goldman Sachs Group Inc. said it plans to roll out derivatives tied to Ethereum to clients, and Cowen Inc. plans to offer “institutional-grade” custody services for cryptocurrencies.

Prices also got a boost this week from veteran hedge fund manager Paul Tudor Jones, who reiterated his view that Bitcoin is a good hedge against inflation.

“I like Bitcoin as a portfolio diversifier,” Tudor Jones of Tudor Investment Corp. said in an interview with CNBC. “Everybody asks me what should I do with my Bitcoin? The only thing I know for certain, I want 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities.”

Bitcoin still being called a bubble after May’s 35% crashOther highlights from survey, which was conducted June 4 to 10, include:

  • 72% of investors say inflation is transitory
  • 63% expect Federal Reserve to signal tapering in August-September
  • Inflation and bond market taper tantrum tied for the top tail risk
  • Allocation to bonds at three-year low (net -69%), while stocks back up to 2021 highs (61%)
  • Any equity market correction in the next six months likely to be less than 10%, according to 57% of investors
  • Managers favor a mix of value and tech stocks as best-performing assets in next four years
  • Allocation to Eurozone equities increased to net 41% overweight, highest since Jan. 2018
  • Allocation to U.S. equities remained at 6% overweight
  • Exposure to U.K. stocks increased to 4% overweight, highest since March 2014

–With assistance from Michael Msika.



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Wall Street asks if Bitcoin can ever replace fiat currencies, BFSI News, ET BFSI

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By Sydney Maki and Vildana Hajric

El Salvador’s bold move to accept Bitcoin as legal tender has Wall Street once again wondering whether a cryptocurrency could really ever replace the old-school dollar.

It’s a question that appeared, at least to some, to already be nearly answered after a handful of trailblazing companies — including Tesla Inc., MicroStrategy Inc. and Square Inc. — incorporated Bitcoin into their balance sheets without igniting a broader corporate revolution. Now, the focus is turning to governments.

El Salvador, which started using the U.S. dollar as its currency more than 20 years ago, last week became the first country in the world to pass legislation allowing use of Bitcoin in any transaction. President Nayib Bukele says the point is to counter the fact that relatively few citizens have bank accounts and to cut the cost of sending remittances, or money that workers ship back to their families in El Salvador from other countries.

Some observers wonder whether a bigger movement is afoot: replacing a conventional currency — the dollar, the titan of global commerce and finance — on a national scale and then beyond.

The answer, at least for Julian Sawyer, chief executive officer of Bitstamp, one of the world’s longest-running crypto exchanges, is not quite yet.

“There’s been a lot of people who have sat in the crypto world who’ve said, ‘Oh, crypto is going to take over the world and traditional banks and central banks will go away,’” he said in a telephone interview from London. “That’s not going to happen.”

While the technology itself may be used increasingly in the behind-the-scenes plumbing of financial services, such as money being sent across borders, Sawyer said Bitcoin is still too volatile to fully replace the dollar, though it may become part of the mix.

“Will there still be the dollar? Yes,” he said. “Will there still be Visa and Mastercard? Absolutely. It will just be we’ll have alternatives for using plastic, or paper, or coins or checks.”

El Salvador’s central bank president also said on state television that Bitcoin would not replace the greenback in the nation.

The dollar is stable, especially when compared with Bitcoin’s explosive price moves. And whereas the dollar usually fluctuates for mundane reasons, crypto can be swayed by tweets, memes and Elon Musk — not a great fit for a national or global currency. Bitcoin quadrupled last year, while the Bloomberg Dollar Spot Index slipped 5.5% — a fairly big number for the greenback. Since mid-April, Bitcoin has lost nearly half of its value.

Bank of America Corp. research shows Bitcoin is about four times as volatile as the Brazilian real and Turkish lira — and neither of those is anyone’s model of stability.

“Bitcoin injects extra volatility,” which is counterproductive for countries looking for stability, said Marc Chandler, chief market strategist at Bannockburn Global Forex. “Why do countries peg their currency to another currency or have a currency board or have a dollarized economy? It’s because their currency has become too volatile or lost credence in the market and become out of control, very inflationary.”

Test Case
That doesn’t mean other countries won’t look to El Salvador as a test case for what can happen, especially those that benefit from remittance flows or have central banks already researching or piloting cryptocurrencies of their own.

“Countries can’t just look away from this option now,” said Valkyrie Investments CEO Leah Wald, who previously worked for the World Bank. “For the longevity and health and well-being of Bitcoin, and the Bitcoin network, this is the dawn of a new day.”

Nations from Haiti to Guatemala, South Sudan and Liberia could be next to adopt Bitcoin given their dependence on remittance inflows, high poverty and low financial inclusion, according to Rahul Shah, Tellimer Ltd.’s head of financials equity research.

Other dollarized economies — those, like El Salvador, that are based on the greenback — are also candidates to officially adopt Bitcoin and become less dependent on the Federal Reserve and U.S. policies.

“It potentially gives the ability to not be as beholden to the dollar over the long term, and be more independent of the existing financial system,” said Brad Bechtel, global head of currencies at Jefferies. “Once you see one country go that way, it wouldn’t surprise me to see more.”

Ecuador, which has been dollarized for two decades, could also consider Bitcoin, said Emily Weis, a global macro strategist at State Street Corp. Colombia and Mexico, meanwhile, would risk disrupting their local currencies, even if they have large remittances and crypto interest among the local populations, she said.

“Many EM populations already have an affinity for cryptocurrencies given capital controls, fragile local market dynamics, and volatility of local currencies,” Weis said.

There’s also the related business opportunities: El Salvador’s Bukele, for example, is using the new law as a way to stoke interest in mining Bitcoin in the coastal country. He ordered the president of the state-owned geothermal electric company to make plans to offer greener mining facilities.

“All it takes is one small domino and eventually it can create real change,” said Alex Tapscott of Ninepoint Partners LP, which has a Bitcoin ETF in Canada.



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US regulators signal stronger risk, tax oversight for cryptocurrencies, BFSI News, ET BFSI

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WASHINGTON: US Federal Reserve chief Jerome Powell turned up the heat on cryptocurrencies on Thursday, saying they pose risks to financial stability, and indicating that greater regulation of the increasingly popular electronic currency may be warranted.

The Treasury Department, meanwhile, flagged its concerns that wealthy individuals could use the largely unregulated sector to avoid tax and said it wanted big crypto asset transfers reported to authorities.

The back-to-back announcements came in a week when Bitcoin, the most popular cryptocurrency, took a wild ride, falling as much as 30% on Wednesday after China announced new curbs on the sector, underscoring the volatility of the sector.

Powell underlined cryptocurrency risks in an unusual video message that also laid out a clearer timetable as the Fed explores the possibility of adopting a digital currency of its own.

While highlighting the potential benefits of advances in financial technology, Powell said cryptocurrencies, stablecoins and other innovations “may also carry potential risks to those users and to the broader financial system.”

As the technology advanced, “so must our attention to the appropriate regulatory and oversight framework. This includes paying attention to private-sector payments innovators who are currently not within the traditional regulatory arrangements applied to banks, investment firms, and other financial intermediaries.”

Powell’s comments signaled how seriously the Fed has been forced to reckon with the surge in popularity and market values of non-traditional currency options such as Bitcoin, especially as it looks at developing a digital version of the U.S. dollar, the world’s reserve currency.

Speculative Assets
The Fed and Treasury consider cryptocurrencies, which now have a market capitalization of about $2 trillion, to be more like art, gold or other highly speculative assets.

A central bank digital currency, though, offers whoever holds it – a person, a business, even another government – a direct claim on that central bank, which is exactly what holding a paper dollar bill does now.

Powell said the Fed would release a discussion paper this summer on digital payments, with a focus on the benefits and risks of establishing a central bank digital currency, and will also seek public comment.

He noted that “to date, cryptocurrencies have not served as a convenient way to make payments, given, among other factors, their swings in value.”

The Treasury also flagged cryptocurrency risks, including opportunities for wealthy individuals to move taxable assets into the largely unregulated crypto sector.

“Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,” the Treasury said.

Its proposal, disclosed as part of a policy report https://home.treasury.gov/system/files/136/The-American-Families-Plan-Tax-Compliance-Agenda.pdf detailing the Biden administration’s $80 billion IRS enforcement proposal to boost revenue collection, would provide additional resources for the IRS to address crypto assets,

In addition to the reports of $10,000-plus cryptocurrency transfers that would parallel bank reports of similarly sized cash transfers, the Treasury also proposed that crypto asset exchanges and custodians also report transactions to the IRS related to bank interest, dividend and brokerage transactions.

The reporting requirements, depending on how they are structured, could also allow the government to gain insight about US companies that are extorted to pay hackers ransoms, almost invariably in cryptocurrency, to regain control of their IT systems.

Law enforcement and private sector cybersecurity experts alike have complained that a lack of transparency around these ransomware incidents contributes to their continued occurrence.

The Treasury disclosure took the wind out of a rally in the dollar value of Bitcoin on Thursday that followed steep plunges for Bitcoin and etherium on Wednesday. Bitcoin was up 8.7% in afternoon trade after an earlier gain of 10%.

While the Fed and some other developed economies are still conducting research on what a central bank digital currency would look like, China is moving ahead at a fast clip and is currently piloting a digital version of the yuan, with plans to ramp up usage before the 2022 Winter Olympics in Beijing.

Powell said last month that the Fed would not rush its efforts in response to China’s more aggressive pace, noting that the approach taken there would not work in the United States.

“It is far more important to get it right than it is to do it fast,” Powell said after the April policy setting meeting.

The Boston Fed is currently working with the Massachusetts Institute of Technology to research the technology that could be used for a central bank digital currency and will be releasing those findings in the third quarter.

Congressional action would be required before a digital currency could be developed.

Also on Thursday, U.S. Securities and Exchange Commission Chair Gary Gensler said he would like to see more regulation around cryptocurrency exchanges, including those that solely trade bitcoin and do not currently have to register with his agency.

“This is a quite volatile, one might say highly volatile, asset class, and the investing public would benefit from more investor protection on the crypto exchanges,” he said at the Financial Industry Regulatory Authority’s annual conference.



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Bitcoin posts record weekly outflows as gains stall, BFSI News, ET BFSI

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NEW YORK: Bitcoin hit record outflows last week, as investors diversified into cryptocurrency assets with new developments in their specific network such as ethereum, data from digital currency manager CoinShares showed on Monday.

Outflows for bitcoin products and funds totaled $98 million, or 0.2% of total assets under management. For the year, total bitcoin inflows amounted to $4.3 billion. In 2020, investors pumped $15.6 billion into bitcoin products and funds, while ethereum inflows reached nearly $2.5 billion, data showed.

Since hitting a record just under $65,000 in mid-April, bitcoin’s price has fallen 35%. Bitcoin was down 5.2% at $44,073, driven by tweets from Tesla Inc. chief Elon Musk.

“While it only represented 0.2% of AUM, last week’s largest-ever outflows from bitcoin investment products is noteworthy,” said Matt Weller, global head of market research at Forex.com.

“Bitcoin’s perceived environmental costs are becoming a bigger and bigger part of the narrative, boosting the relative appeal of ethereum and its upcoming transition to the less energy-intense proof-of-stake security model,” he added.

Ethereum, the second-largest cryptocurrency in terms of market capitalization, continued to post solid inflows of $26.5 million last week, with a total of $910 million so far this year.

The cryptocurrency has been bolstered by the surge in usage of ethereum-based decentralized finance applications, which facilitate crypto-denominated lending outside traditional banking.

Ethereum hit a record high of $4,380.64 last week but was last down 6.3% at $3,358. It has gained about 355% in 2021.

All other digital asset investment products saw inflows as well in the latest week, such as Cardano and Polkadot.

Grayscale remains the largest digital currency manager, with $47.268 billion in assets, down from $49.3 billion at the end of April.

CoinShares, the second-biggest and largest European digital asset manager, oversaw about $6 billion as of last week, up from $5.8 billion in late April.



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Bitcoin tumbles below $45,000 after 3 months after Elon Musk implies Tesla may sell crypto, BFSI News, ET BFSI

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By Patrick McHale and Yueqi Yang

Elon Musk continued to whipsaw the price of Bitcoin, briefly sending it to the lowest since February after implying in a Twitter exchange Sunday that Tesla Inc. may sell or has sold its cryptocurrency holdings.

Bitcoin slid below $45,000 for the first time in almost three months after the billionaire owner of the electric-car maker seemed to agree with a Twitter post that said Tesla should divest what at one point was a $1.5 billion stake in the largest cryptocurrency. It traded at $45,270 as of 5:51 p.m. in New York, down about $4,000 from where it ended Friday.

The online commentary was the latest from the mercurial billionaire in a week of public statements that have roiled digital tokens. He lopped nearly $10,000 off the price of Bitcoin in hours last Wednesday after saying Tesla wouldn’t take it for cars. A few days earlier, he hosted “Saturday Night Live” and joked that Dogecoin, a token he had previously promoted, was a “hustle,” denting its price. Days later he tweeted he was working with Doge developers to improve its transaction efficiency.

Bitcoin tumbles below $45,000 after 3 months after Elon Musk implies Tesla may sell crypto
Musk’s disclosure in early February that Tesla used $1.5 billion of its nearly $20 billion in corporate cash to buy Bitcoin sent the token’s price to record and lent legitimacy to electronic currencies, which have become more of a mainstream asset in recent years despite some skepticism.

His latest dustup with Bitcoin started with a tweet from a person using the handle @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…”

The Tesla chief executive officer responded, “Indeed.”

The twitter account @CryptoWhale, which calls itself a “crypto analyst” in its bio, also publishes a Medium blog on market and crypto trends.

Musk has spent hours Sunday hitting back at several different users on Twitter who criticized his change of stance on Bitcoin last week, a move he said was sparked by environmental concerns over the power demands to process Bitcoin transactions. He said at the time that the company wouldn’t be selling any Bitcoin it holds.

An outspoken supporter of cryptocurrencies with cult-like following on social media, Musk holds immense sway with his market-moving tweets. He has been touting Dogecoin and significantly elevated the profile of the coin, which started as a joke and now ranks the 5th largest by market value.

Dogecoin is down 9.6% in the last 24 hours, trading at 47 cents late Sunday afternoon, according to data from CoinMarketCap.com.

Tesla didn’t immediately respond to an email seeking comment on Musk’s tweet on Sunday.

Musk’s Sunday social-media escapades were the latest chapter in one of the zaniest weeks in a crypto world famous for its wildness. For die hards, the renewed slumps in Bitcoin and other tokens have done nothing to deter crypto enthusiasts who say digital coins could many times their current value if they transform the financial system.

“We’re looking at the long-term and so these blips, they don’t faze us,” Emilie Choi, president and chief operating officer of crypto exchange Coinbase Global Inc., said last week on Bloomberg TV about the wild swings prevalent in the market. “You’re looking for the long-term opportunity and you kind of buckle up and go for it.”

Seat belts were needed by anyone watching the crypto world in the past eight days. Aside from Musk’s antics that sent Doge and Bitcoin on wild rides, a host of other developments pushed around prices.

Tether, the world’s largest stablecoin, disclosed a reserves breakdown that showed a large portion in unspecified commercial paper. Steve Cohen’s Point72 Asset Management announced that it would begin trading cryptocurrencies. And a longstanding critique of the space reared its head again: illicit usage.

It was reported that the owners of the Colonial Pipeline paid a $5 million ransom in untraceable digital currencies to hackers that attacked its infrastructure, while Bloomberg also reported that Binance Holdings Ltd., the world’s biggest cryptocurrency exchange, was under investigation by the Justice Department and Internal Revenue Service in relation to possible money-laundering and tax offenses.

But, “for many crypto assets such as Bitcoin and Ethereum, the long-term story has not changed,” said Simon Peters, an analyst at multi-asset investment platform eToro. “This emerging asset class continues to revolutionize many aspects of financial services, and while nothing goes up in a straight line, the long-term fundamentals for crypto assets remain as solid as ever.”

Bitcoin was already swinging wildly on the weekend before Musk tweeted. The two days tend to be particularly volatile for cryptocurrencies, which — unlike most traditional assets — trade around the clock every day of the week. Bitcoin’s average swing on Saturdays and Sundays so far this year comes in at 4.95%.

That type of volatility is owing to a few factors: Bitcoin’s held by relatively few people, meaning that price swings can be magnified during low-volume periods. And, the market remains hugely fragmented with dozens of platforms operating under different standards. That means cryptocurrencies lack a centralized market structure akin to that of traditional assets.

–With assistance from Vildana Hajric and Brandon Kochkodin.



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