Is it time to get out of Bitcoin? That’s what the experts think after Musk’s U-turn

Bitcoin price slipped back below the all-important $ 50,000 threshold on May 13 after Tesla CEO Elon Musk said the cryptocurrency was too energy-intensive to accept as a means of payment.

Musk said Bitcoin’s energy usage “has been insane over the past few months,” although he added that the company intends to keep billions of dollars worth of Bitcoin in its ledger and use it for transactions once Bitcoin’s network becomes more sustainable .

The statement against the world’s largest cryptocurrency came as a surprise to many, as Musk was previously one of the vocal supporters of Bitcoin.

READ The likelihood of Bitcoin falling to $ 10,000 drops despite the Tesla turnaround

Here’s what experts have said about what the future might be for Bitcoin, and whether Musk’s decision will change anything for traders.

Janis Legler, Head of Research at London-listed Digital Asset Manager Mode

“Bitcoin can be at the heart of the renewable energy transition as bitcoin mining helps better manage the oversupply, which is currently difficult and costly for renewable companies to manage, and support more investment. It’s also important to note that it is estimated that over 70% of Bitcoin today is mined using renewable energy. Elon Musk is already making an incredibly positive impact on the environment and his words can help Bitcoin mining entrepreneurs around the world lead energy production into a green future.

It’s also important to note that it is estimated that over 70% of bitcoin today is mined using renewable energy

Retail markets are too leveraged that prices can move quite a bit when news is interpreted bearishly. But our users were very happy to buy the dip as 79% of the volume was bitcoin purchases. “

Anthony Scaramucci, founder of Skybridge Capital

“Elon is not half a guy. I expect it will become a competitor / disruptor in the Bitcoin mining industry.

I bet 500,000 [Satoshis, approximately $250] that Tesla / Solar City will announce its entry into “super clean” Bitcoin mining within a year. “

Nigel Green, CEO of the financial advisory firm deVere Group

“Just a few months ago, Musk announced too much fuss that his company Tesla had bought $ 1.5 billion worth of Bitcoin and was going to accept it as payment for cars. The move was one of the reasons why the price of the cryptocurrency has increased this year. Suddenly he’s not so keen on it for environmental reasons. But why now? These questions about the environmental impact have not come up in the last few months?

There are serious and important environmental issues that urgently need to be addressed in Bitcoin mining. Any action in support of the further transition to full use of sustainable energy must be encouraged – this is something I wholeheartedly support. According to research, 76% of cryptocurrency miners currently use electricity from renewable energy sources as part of their energy mix. This begs the question: with all his immense resources and power, why can’t Musk ensure that all of his bitcoins are mined this way?

READ The Dark Side of NFTs: Why Collectable Digital Art May Challenge Investors’ ESG Goals

Musk is often referred to as a contrarian. He likes to go up against the crowd in a high profile. Is his waning interest in Bitcoin part of it at a time when massive amounts of institutional investment are flowing from major Wall Street banks?

With Bitcoin fundamentals – the very ones that are attracting tremendous institutional and private interest – unchanged – many investors are likely to take advantage of this recent price drop from recent all-time highs as an important buying opportunity. Musk clearly still believes in Bitcoin – he hasn’t sold any – and I now hope that he will use not just words but his immense resources to further accelerate the transition to sustainable energy for crypto mining. “

Daniel Ives, an analyst at Wedbush Securities

“Musk is now concerned about the use of fossil fuels in Bitcoin mining and Bitcoin transactions, but the way Bitcoin mining has not changed in the last three months, which is why it is very surprising and confusing, crypto transaction three.” Tracing back months later, switching to both Tesla and crypto investors.

Tesla’s acceptance of Bitcoin transactions was seen as an important step for the crypto market, as now the Tesla / Musk reversal will have a negative impact on Bitcoin and the crypto landscape in the short term as the market digests this confusing news from one of its biggest supporters . Tesla is not going to sell its Bitcoin investment, which so far has been a very profitable buy. For Tesla and the stock, the non-acceptance of Bitcoin does nothing to change the thesis or the growth path of the history of electric vehicles, but it does add to the noise and volatility surrounding the name at a time when risky assets are under enormous selling pressure, the road with Tesla at the top.”

Joel Kruger, digital currency strategist at LMAX Digital

“The other day Musk was praised by the crypto community for his advocacy of the space, and while he still sees the prospect positively, he has now raised concerns about Bitcoin mining and the ‘huge cost to the environment.’

But the debate about Bitcoin mining and its negative impact on the environment is nothing new and there have been many compelling arguments to offset this criticism, not least the use of an enormous amount of renewable energy by Bitcoin. Efforts are already being made to further reduce Bitcoin’s carbon footprint, and there is another compelling argument that the cost of abandoning the decentralized currency is far higher than the current downside risks with Bitcoin floating around.

READ Goldman’s Dogecoin Millionaire Reveals Crypto Gap for City Traders

Cryptoassets have also been negatively impacted by global macro forces, with fears of rising inflation heightened on Wednesday after US CPI readings far exceeded projections. There are concerns that higher inflation will jeopardize economic recovery as it will put pressure on central bankers to raise interest rates. This in turn could trigger the liquidation of risk assets, which could put crypto under pressure. “

Simon Peters, cryptoasset analyst at the multi-asset investment platform eToro

“Bitcoin, Ethereum and other crypto assets are now entering correction territory after having fallen more than 20% from their highs in most cases.

“The sell-off is driven by a number of factors; Valuations were at or near all-time highs earlier this month so there will of course be some profit-taking, while we also see a general sell-off in risk assets – like technology stocks – as post-pandemic economies begin to open and investors worry about possible interest rate hikes and higher inflation.

“For many crypto assets like Bitcoin and Ether, however, the long-term history has not changed. This emerging asset class continues to revolutionize many aspects of financial services, and while nothing goes up in a straight line, long-term crypto-asset fundamentals remain as solid as ever.

Indeed, we would expect buyers to return to Bitcoin, Ethereum and Peers in the next few weeks to take advantage of lower prices. What is important is that we continue to see higher lows and higher highs for crypto assets as more investors move into this asset class, and we don’t expect that trend to change. “

Laith Khalaf, Financial Analyst, AJ Bell

“Tesla and Bitcoin have always been strange bedfellows given the electric car maker’s environmental friendliness and the enormous energy consumption of the cryptocurrency. Musk hasn’t fully closed the door on Bitcoin yet, and Tesla says it will return to using the cryptocurrency once it moves to more sustainable energies. Even if that happens, one might wonder if this energy couldn’t be more productively used in the global economy, rather than solving a payment problem that for most people just doesn’t exist.

READ Should investors be interested in crypto? That’s what the experts say

“Bitcoin supporters will wonder where the future of cryptocurrency is. Environmental concerns are an incredibly sensitive issue right now, and Tesla’s move could serve as a wake-up call for businesses and consumers using Bitcoin who had previously not considered their carbon footprint. Tesla’s decision is certainly putting pressure on other large companies that are accepting Bitcoin to review their practices, as boardrooms will now be cautious about getting ESG investors on the shareholder register. This underlines that the long-term introduction of cryptocurrencies by companies, consumers and investors is still very uncertain, as Tesla itself has emphasized. “

These answers have been edited and summarized for the sake of clarity.

To contact the author of this story with feedback or news, email Emily Nicolle

Comments are closed.