- Dogecoin and other cryptocurrencies plunged on Thursday after Elon Musk voiced bitcoin concerns.
- An analyst said buyers would soon return to buy cryptocurrencies to take advantage of low prices.
- Dogecoin was already suffering a bad week after Musk’s “SNL” hosting gig.
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The sell-off is being driven by a number of factors, according to Simon Peters, a crypto-asset analyst at the investment platform eToro.
“Valuations were at or near all-time highs earlier this month, so there will naturally be some profit taking, while we are also seeing a general sell-off among risk assets – such as technology stocks – as economies start to unlock post the pandemic and investors fret over potential rate rises and higher inflation,” he said.
But he said he expected buyers to return to cryptocurrencies in the coming weeks to take advantage of lower prices.
An overall drop in the crypto market had “#cryptocurrencies” trending on Twitter, with many users reacting to the surprise that Musk delivered.
Musk, who has regularly tweeted about dogecoin, said he was concerned about “rapidly increasing use of fossil fuels for bitcoin mining and transactions.” Earlier this week, he teased that Tesla could accept payments in dogecoin.
But dogecoin was already suffering a bad week after Musk’s “Saturday Night Live” appearance, during which he called it a “hustle.” The digital asset is down 32% this week so far.
“Bitcoin will not last as a financial instrument with the underlying climate damage it causes through carbon emissions,” Jeff Schumacher, the CEO and founder of New Asset Exchange, said.
“In a post-COVID-19 world, as the focus of companies shifts back to climate concerns, bitcoin’s poor environmental credentials – the CO2 production it is responsible for – will make companies and governments unwilling to use it as they attempt to green their image and push towards a net-zero world,” he added.
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