The price of Bitcoin tumbled 20% in the 24-hour period from Tuesday to Wednesday to below $32,000, according to Coinbase.
The price plunge came after Tesla CEO Elon Musk tweeted that Tesla would no longer accept bitcoins due to the cryptocurrency’s environmental impact. Musk cited the heavy impact of the computational “mining” process. His comments caused over $300 billion to be erased from the entire cryptocurrency market in the span of a day.
Bitcoin is now at its lowest level since late January. All of the gains it amassed following Tesla’s announcement that it would purchase $1.5 billion worth of the cryptocurrency have now been wiped out.
Tesla pauses use of Bitcoin
On Wednesday, Musk said Tesla will resume using Bitcoin “as soon as mining transitions to more sustainable energy.” In the meantime, the company will look for cryptocurrencies that don’t take such a large toll on the environment.
“Tesla will not be selling any bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy,” Musk said in a statement. “We are also looking at other cryptocurrencies that use <1% of bitcoin’s energy/transaction.”
Other cryptocurrencies have also suffered losses lately. Ether was down 34% at $2,218, according to Coinbase. Dogecoin, which was started as a joke but has been talked about by Musk, plunged 44% to about 26 cents.
Other news fueling the ‘bear case’
Although Elon Musk has acknowledged that his comments on cryptocurrency “can really move the market,” he isn’t solely to blame for this week’s crypto crash. On Tuesday, three Chinese banking and payment industry bodies put out a statement warning financial institutions not to take part in business related to virtual currencies.
“The crypto markets are currently processing a cascade of news that fuel the bear case for price development,” Ulrik Lykke, executive director at crypto hedge fund ARK36, told CNBC.
However, Bitcoin is still up 30% year-over-year, and Lykke noted that it has overcome similar blows in the past.
“In terms of Bitcoin’s outlook, things may be looking grim right now, but historically this is just yet another hurdle for Bitcoin to overcome and a small one compared to what it has braved in the past,” said Lykke.