Bitcoin falls as markets digest Tesla’s billion dollar acquisition

Posted: 11 February 2021 10:50 am

The wider market looks optimistic as altcoins rally to new highs following Tesla's investment in Bitcoin.

  • Bitcoin falls slightly from Tuesday's record high price of US$48,000.
  • Elon Musk under possible SEC scrutiny over the way Tesla's Bitcoin purchase unfolded.
  • Altcoin market sees one of its biggest days of growth in recent memory.

Bitcoin is trading at US$44,088 at the time of writing, which is a 3.5% decrease in the last 24 hours. The decrease shows Bitcoin slowly coming off the boil after a market rallying disclosure from Tesla of its US$1.5 billion Bitcoin acquisition which sent Bitcoin to a record price level of US$48,025.

Bitcoin tracked mainly sideways for most of the day even posting prices challenging the day's high as little as 10 hours ago. From there Bitcoin dropped to a low of US$43,872 less than five hours before the current price.

How to buy Bitcoin

The drop comes amid speculation that the Tesla CEO Elon Musk could come under scrutiny from regulators. Commenting to the Daily Telegraph, Doug Davison who was formerly a Securities and Exchange Commision officer with the financial crimes enforcement division said that "it wouldn't be surprising".

Davison listed recent tweets which have had a material effect on markets such as the recent Dogecoin tweets from Musk sending the price of Dogecoin into frenzied trade, a spike which is only subsiding now nearly a week later.

The key questions are when exactly did Tesla purchase the Bitcoin, who did it purchase the Bitcoin from and at what quantities, with Tesla disclosing that it bought the Bitcoin on aggregate meaning that multiple purchases could have taken place.

Two days before Tesla filed with the SEC on 8 February, the Daily Hodl reported on a massive US$1.1 billion dollar transaction using a relatively new wallet address. The wallet in question was made on 31 December – the same date Tesla said its Bitcoin purchase was completed by.

Bitcoin has hardly been below US$30,000 since 2 January, representing the longest stretch of time Bitcoin has spent at or around its market highs in contrast to the bull run of 2017 when the price of Bitcoin cliff dived shortly after reaching US$20,000.

There are some who say that with greater institutional investment in cryptocurrency markets Bitcoin could see less volatility. While the market seems to be split on that note, investors will keenly watch Bitcoin's price moves over the coming weeks as job data in the US continues to improve along with consumer sentiment.

For that reason it will be interesting to see if the price of Bitcoin returns to its January price band, ranging from the low US$30,000 mark upwards to the mid to high 30,000s. In light of the major Tesla purchase, greater understanding of Bitcoin price patterns could be found if the price settles around US$40,000, similar to trade patterns over the month of January.

Altcoin market strengthens following Bitcoin's lead

An image showing the growth of the top 10 cryptocurrencies of the past week.

The altcoins market is looking at one of its strongest periods in recent years according to both weekly and daily data from CoinGecko.

Several of the top 100 altcoins ranked by market capitalisation have posted gains of over 100% over the week, with many setting new all-time-highs.

Of the top 15 altcoins Dogecoin, Cardano and Binance coin have all posted gains of 100% and more. Binance coin, which is the native token of Binance exchange, has risen by 143% over the week and Dogecoin is still up over 131% and has moved up 5 places in the market cap ranks in only a week.

Interested in cryptocurrency? Learn more about the basics with our beginner's guide to Bitcoin, dive deeper by learning about Ethereum and see what blockchain can do with our simple guide to DeFi.

Disclosure: The author owns a range of cryptocurrencies at the time of writing

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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