Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Bitcoin is on a wild ride today as Tesla CEO Elon Musk sparked alarm that the electric vehicle maker could sell its holdings — before clarifying that it has not sold any bitcoin.
The drama began last night on Twitter (of course), when an account called @CryptoWhale tweeted:
“Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him…”
Musk (who last week suspended plans to let Tesla customers pay in bitcoin) replied:
Bitcoin had already weakened last week, following Musk’s criticism of its high energy use and environmental impact.
And Musk’s one-word response last night sent bitcoin tumbling to its lowest level since February, as fear swept the crypto world that Tesla could have already sold its holding (even though Musk said last week that Tesla will not be selling any bitcoin).
It slumped as low as $42,212.56, Coindesk data shows — and further from the record highs over $64,000 seen in April.
But…Musk has now returned to Twitter, and declared that:
To clarify speculation, Tesla has not sold any Bitcoin.
This sent bitcoin bouncing back to around $44,500 in volatile trading — still down around 10%, and the weakest since the end of February.
Musk’s ability, and willingness, to shift cryptocurrency prices with a single tweet could well deter other companies from following Tesla’s lead and putting bitcoin on their balance sheet.
Kyle Rodda of IG explains that the episode is slowing bitcoin’s move towards the mainstream:
In an exchange on a Twitter thread, the mercurial Mr. Musk implied that Tesla, having backflipped on its decision to accept Bitcoin as a form of payment, may “indeed” offload its Treasury holdings of the asset.
The speculation has seemingly led traders to try and front run Tesla’s potential move, as the thrust behind mainstreaming Bitcoin slows down a little more.
Naeem Aslam, analyst at Think Markets, says ‘Elon’ was the dominant word in the crypto market over the weekend. But, he adds that bitcoin was already shifting downwards – and could have further to fall…..
It is important to keep in mind that it is true that the current sell-off in Bitcoin price is mainly due to Elon Musk. But the reality is that Bitcoin lost its upward momentum a long time ago, and this is because all that positive news about Bitcoin failed to push Bitcoin prices higher.
It was clear that Bitcoin prices went too far, and a correction was due. This correction is taking place now, and it is likely that we may see the Bitcoin price decline further. The near-term support for Bitcoin is near the 38K price level.
Also coming up today
European stock markets have opened a little higher, as concerns over the Indian variant of Covid-19 rise in the UK and coronavirus restrictions are eased further in England, Wales and most of Scotland.
A survey of factories in the New York area, and a new healthcheck on US builders, will show how America’s economy is faring this month.
In the UK, the ONS are publishing a new report into ‘Management Practices, Homeworking and Productivity’ during the pandemic.
A major deal is brewing in the media space, with US telecoms giant AT&T reportedly closing in on an agreement to combing its WarnerMedia unit – which includes CNN and HBO – with rival Discovery.
- 9.30am BST: UK Office for National Statistics report into homeworking in the pandemic
- 1.30pm BST: New York Empire State Manufacturing Index for May
- 3pm BST: NAHB index of the US housing market for May