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Bitcoin headed for a 13% fall in the week to Friday, after Elon Musk’s major U-turn on accepting the cryptocurrency as payments for Teslas, but managed to regain some stability over the course of the day.
The most-traded crypto asset was down 13.1% for the week on Friday on the Coinbase exchange, one of its biggest seven-day falls in recent months.
Bitcoin was last up 2.9% on the day on Friday at $50,757, suggesting the asset found some support at around $50,000 after a bruising few sessions. It remained around 70% higher year-to-date, but was still 22% below an all-time high of close to $65,000 touched in April.
A number of factors have combined to pull bitcoin down over the week, the most important being Musk’s decision to stop accepting payment for Tesla cars in bitcoin due to concerns about its impact on the environment.
Tesla’s purchase of $1.5 billion worth of bitcoin and its decision to start taking it as payment sent the token soaring in February.
Musk’s announcement on Wednesday night had the opposite effect, sending bitcoin tumbling more than 15% before it recovered some ground. The Tesla boss later doubled down on his criticisms, saying the amount of energy used in the computing process that creates and secures the token – known as mining – is “insane.”
Bitcoin had already run into trouble on Wednesday, falling after stronger-than-expected US inflation data raised the possibility that the Federal Reserve may have to cut back on its support for the economy sooner than expected.
And US regulators are investigating the world’s biggest cryptocurrency exchange Binance, Bloomberg reported Thursday.
The events raised fresh questions about crypto assets. Shane Oliver, head of investment strategy at AMP Capital, said: “Bitcoin’s vulnerability to comments by influential individuals highlights its highly speculative nature.”
UBS analysts said a note to clients: “We think investors should maintain discipline and exercise extreme caution with regard to crypto speculation.”