Bitcoin soared on Tuesday to an all-time high reaching the $50,000 milestone at $50.602.
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The world’s most valuable cryptocurrency sank over 10% to a price of $51,993 Monday morning, according to data from Coin Metrics. At one point, bitcoin had dipped below the $50,000 level, falling as low as $47,700.
It wasn’t immediately clear what was behind bitcoin’s move lower Monday. On Saturday, Tesla’s CEO said the prices of bitcoin and rival token ether seemed excessive. Bitcoin rallied to more than $58,000 on Sunday, but has since reversed course.
As of 10:17 a.m. ET, bitcoin was trading around 9% lower at a price of $52,778.
The digital coin is still up more than 70% so far this year. Last week, bitcoin hit $1 trillion in market value for the first time — it’s now back below that mark, according to CoinDesk. The token has gotten a boost from news of major Wall Street Banks and Fortune 500 companies warming to cryptocurrencies.
Musk recently came out as a believer in bitcoin, calling it a “good thing” and saying he thinks it’s “on the verge of getting broad acceptance by conventional finance people.”
Earlier this month, Tesla said it had bought $1.5 billion worth of bitcoin and would accept the crypto as payment for its products. The electric vehicle maker made roughly $1 billion in paper profits from its bitcoin investment, according to Wedbush Securities’ Dan Ives.
Tesla is “on a trajectory to make more from its Bitcoin investments than profits from selling its EV (electric vehicle) cars in all of 2020,” Ives estimated in a note published Saturday.
Bitcoin is getting traction from mainstream investors, in part due to the perception that it is a store of value similar to gold. Bitcoin bulls have tried to make the case that investors should add the cryptocurrency to their portfolio to hedge against a potential rise in inflation.
But skeptics aren’t convinced. Analysts at JPMorgan said in a note last week that bitcoin is an “economic side show,” and that the rise of digital finance — not bitcoin — is the “real financial transformation story of the Covid-19 era.”