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Bitcoin Prices Plummeted Days After Elon Musk Tweeted They 'Seem Too High'

Image credits: Reuters/Twitter.

Image credits: Reuters/Twitter.

Elon Musk, whose recent tweets have fueled the digital-currency rally, made the remark on Twitter while replying to a user who said that gold was better than both bitcoin and conventional cash.

Elon Musk may have managed to fluctuate the prices of cryptocurrency, and this time it wasn't Dogecoin.

Billionaire CEO Elon Musk said on Saturday the price of bitcoin and ethereum seemed high, at a time when the cryptocurrencies have hit record highs, with bitcoin crossing the $1 trillion market-capitalization threshold.

The chief executive of Tesla Inc, whose recent tweets have fueled the digital-currency rally, made the remark on Twitter while replying to a user who said that gold was better than both bitcoin and conventional cash.

Musk said in a tweet: “Money is just data that allows us to avoid the inconvenience of barter ...”

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“That said, BTC & ETH do seem high lol,” he added.

The tweet may have backfired - for Elon Musk himself. Tesla Inc. shares slid 8.6 per cent on Monday, according to Bloomberg. The slide in shares also wiped off $15.2 billion from his net worth, no longer leaving him the richest person on the planet.

This isn't the first time Tesla's own stocks plummeted because of Musk: In May 2020, Musk helped send Tesla shares down by 10% after tweeting that the electric carmaker’s price was “too high." Tesla shares were trading at around $140 at that time, on a split-adjusted basis. That downdraft didn’t last long, with the stock closing at $714.50 on Monday.

In early February, Tesla announced it had bought $1.5 billion worth of bitcoin.

In a filing with the Securities and Exchange Commission, the company said it bought the bitcoin for “more flexibility to further diversify and maximize returns on our cash.”

Tesla also said it will start accepting payments in bitcoin in exchange for its products “subject to applicable laws and initially on a limited basis.” That would make Tesla the first major automaker to do so. The $1.5 billion worth of bitcoin will give Tesla liquidity in the cryptocurrency once it starts accepting it for payments.

But Musk's tweet in a dip in prices of Bitcoin shows how much control he holds. In February, he'd even managed to make it rise: The announcements, buried deep in Tesla’s 2020 annual report, drove a roughly 20% surge in the world’s most widely held cryptocurrency to over $47,000. At current prices, 0.8 bitcoins would be enough to buy an entry-level Tesla Model 3.

Musk, an ardent proponent of digital currencies, has defended Tesla’s recent purchase of $1.5 billion of bitcoin, which has ignited mainstream interest in the digital currency.