Bitcoin bubble bursts overnight, dragging down stocks

Cryptocurrency bubble is bursting, wiping out $600 billion

Enlarge (credit: Aurich Lawson | Getty Images)

Overnight, a broad selloff of prominent cryptocurrencies has vaporized billions of dollars in value. Bitcoin, the largest cryptocurrency affected, is off more than 18 percent in the last 24 hours. Currently, it’s worth just over half what it was in mid-April. Over the past week, more than $600 billion has been wiped out of a wide range of more than 7,000 cryptocurrencies, including bitcoin, ether, and meme coins like Dogecoin, according to CoinGecko. 

The causes for the selloff are myriad. The first shot across the bow came last week when Tesla CEO Elon Musk declared that his company would no longer be accepting bitcoin for car purchases. The change happened less than two months after he introduced that Tesla would accept bitcoin, and the about-face came as Musk declared his concerns over the environmental damages being wrought by the energy-intensive cryptocurrency. (His thinking on the matter may have been influenced by an Ars article about a private equity firm that revived a zombie power plant just to mine bitcoin.)

The next jolt to crypto-markets came this past Sunday when Musk suggested that Tesla either had or would be selling its bitcoin holdings, which amounted to $1.5 billion when they were disclosed back in early February. Musk’s market-moving tweet was a cryptic “Indeed” posted in reply to @CryptoWhale, who had said, “Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings.” That single word sent bitcoin tumbling. On Monday, Musk clarified that “Tesla has not sold any Bitcoin.” After that, the cryptocurrency regained some of its value.