By Dan Blystone, June 4th 2021
Bitcoin (live chart) fell sharply in early Friday trading after Elon Musk posted a tweet suggesting a split with the cryptocurrency. The eccentric billionaire tweeted a picture of a couple breaking up, using the hashtag #bitcoin and a broken heart.
A Wall Street Journal article from May 23rd described Musk as bitcoin’s biggest influencer as his sometimes cryptic statements have triggered massive price volatility this year.
On February 8th, Tesla announced in an SEC filing Monday that it bought $1.5 billion worth of bitcoin. The company also said it would start accepting bitcoin as a payment method for its products. The price of bitcoin leapt by 20% on the news.
However, on May 12th, Musk tweeted that Tesla has “suspended vehicle purchases using bitcoin,” out of concern over “rapidly increasing use of fossil fuels for bitcoin mining”. Price plunged by 10% after the shift in stance.
Meanwhile, a JPMorgan note issued on Tuesday said institutional investors have so far held off on buying the dip in bitcoin, and suggested that prices may have further to fall. Strategist Nikolaos Panigirtzoglou wrote: “It now seems unlikely that we see this volatility ratio returning to the x2 levels of last summer. The best we can hope for over the medium term is for this volatility ratio to partially revert from around x6 currently to around x4 by year end.”
Looking at the daily chart above we can see that price is now below the 200-period simple moving average and that a bearish pennant pattern has formed.
Bitcoin reached a record high of $62,741 on April 14th and little more than a month later, by May 19th, it had fallen to about $30,000. It has now fallen by 40% from its all-time high, but still maintains a strong gain for the year of over 30%.