The price of bitcoin plummeted on Tuesday and took shares of electric car maker Tesla along for the ride. Investors now fret about Tesla's exposure to the cryptocurrency that has seen its value plunge since hitting a record high on Sunday. Conway G. Gittens has the details.
- A big drop in the price of Bitcoin Tuesday is fueling fears a recent buying frenzy had pushed the value of the notoriously volatile asset far beyond where it should be. The world's biggest cryptocurrency was in the throes of its biggest daily plunge in a month, sparking the liquidation of leveraged bets and a sell-off across the cryptocurrency world.
Tesla was also caught up in the whirlwind as the plummet in Bitcoin takes the shine off of Tesla's recent $1.5 billion Bitcoin investment. With that gamble now worth much less, the stock is under pressure, erasing all of its gains for the year, shaving off more than $110 billion of market value and some $20 billion from CEO Elon Musk's net worth.
Nerves have gotten the best of Bitcoin buyers since it hit a record high on Sunday of more than $58,000. Since then, it has lost over 20% of its value, trading at one point at about $46,000 on Tuesday. Rising government bond yields have recently knocked the wind out of riskier assets on Wall Street, and Bitcoin is one of the riskiest of them all.
The stampede away from Bitcoin only intensified by investors dumping purchases made with borrowed money. Adding to the pressure, comments from US Treasury Secretary Janet Yellen, who on Monday said that digital currency was extremely inefficient at conducting transactions and was a highly speculative asset. Even with Tuesday's plunge, Bitcoin is still up 60% so far this year.