Tesla has announced that they will no longer accept the cryptocurrency as payment, sending the Bitcoin price tumbling below $50,000.
After a promising rebound from its late April sell-off, BTCUSD is once again back in a bear market. The Bitcoin price is down 23% from its April 10th high and below its 100-Day Moving average for only the second time in 6 months.
The Elon Musk Twitter feed is usually associated with inflating the price of digital assets. However, this definitely isn’t the case today.
Musk announced to the market that Tesla would no longer accept Bitcoin as a payment option due to its high environmental costs. Citing the increasing use of fossil fuels for Bitcoin mining, especially coal.
He went on to say:
“Cryptocurrency is a good idea on many levels, and we believe it has a promising future, but this cannot come at a great cost to the environment.”
It seems strange considering the company only announced they would offer the payment solution 3 months ago. It’s hardly a new revelation that Bitcoin mining leaves a carbon footprint.
The Bitcoin price now looks vulnerable to further liquidation if it fails to recover the $50k mark.
As I’m writing, I am watching the price action, and I have to say it’s been a while since I have seen the price this volatile. The Bitcoin price is currently trading between $50,000 and $51,000 in choppy trade, and it seems a real battle between the Bulls and the Bears here.
The damaging tweet could not have come at a worse time for Bitcoin bulls. Sentiment had already taken a hit on the back of the US CPI inflation data, released earlier in the day.
The print which showed inflation is running much higher the Fed’s loose 2.00% target, already had the market in risk-off mode.
The Bitcoin price action in today’s session will be key in determining if the market can recover from this or sink into a deeper bear market.
$50,000 is more of a psychological number. However, a close below it would see BTC lose its second ‘big figure’ in less than a month. A failure to retain the $50k level puts the price in danger of an extension lower.
The January 2020, previous all-time high at $42,000 would be a natural target on continued liquidation.
A close back above $50k and the 100-Day moving average at $53,676 could see the Bitcoin price once again looking towards $60,000.
The path of least resistance is now lower, and I feel the balance of power has shifted to the bears until the technicals turn favorable.