Elon Musk’s surprise reversal on accepting bitcoin payments for Tesla (TSLA) cars has triggered a sharp plunge in the cryptocurrency — spelling trouble for other coins that have notched shocking returns in recent months.
What’s happening: Bitcoin prices have plummeted about 12% to less than $50,000 in the last 24 hours, according to Coindesk. The decline comes after Musk, Tesla’s CEO and a vocal bitcoin advocate, said his company was suspending plans to accept the cryptocurrency as payment for electric vehicles, citing its “high environmental cost.” “We are concerned about rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Musk said in a note posted on Twitter Wednesday. “Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.”
The announcement is rippling through crypto markets. Bitcoin’s massive bull run earlier this year fed enthusiasm among investors for all kinds of coins — even those based on memes with no practical use. But if bitcoin prices have peaked for now, it could spark an exodus of speculators who were trying to make money off the frenzy. “When bitcoin tops out and the bubble bursts, all those glory hunters will move away to another market,” Michaël van de Poppe, a crypto analyst and trader based in Amsterdam, told me. While it’s hard to time such events, the big unwind could be underway. Ethereum, which has gained popularity alongside the rise of non-fungible tokens, or NFTs, is off 14% in the past 24 hours, according to CoinMarketCap. After hitting a record of $4,385 earlier this week, it’s now trading around $3,700.