Musk tweets on cryptocurrencies and Dogecoin leaps, Bitcoin retreats

Bitcoin was heading on Friday for its worst week since February, while dogecoin leapt by a quarter, as the latest tweets on cryptocurrencies from Tesla boss Elon Musk sent the digital coins on a wild ride.

Bitcoin is down about 13% this week, and was last up 1.6% at $50,503. It has slumped over a fifth from its record of just under $65,000 hit last month.

Cryptocurrency markets have gyrated to Musk tweets for months, with his comments on dogecoin – a token started as a joke that has scant practical use – fueling a hundred-fold rally this year.

Energy usage trend over past few months is insane https://t.co/E6o9s87trw pic.twitter.com/bmv9wotwKe

— Elon Musk (@elonmusk) May 13, 2021

Musk knocked bitcoin this week after tweeting that Tesla would stop accepting it for payment owing to environmental concerns.

“Toppy markets (are) looking for an excuse to breathe,” said Ben Sebley of crypto firm BCB Group. “Long money doesn’t care about Elon’s tweets. Fast money trades around that stuff now.”

$68 BILLION MARKET CAP

Dogecoin has climbed about 25% after Musk’s latest tweet, according to Coin Gecko, and was last at $0.52, down from its record $0.73 hit last week.

Representations of virtual currency Bitcoin are placed on U.S. Dollar banknotes in this illustration taken May 26, 2020. REUTERS/Dado Ruvic/File Photo

“Working with Doge devs to improve system transaction efficiency. Potentially promising,” Musk wrote on Thursday. He called it a “hustle” last week, knocking its price.

It was unclear if Musk was referring to efficiency in terms of energy, ease of use or suitability as a currency, said Mark Humphrey-Jenner, associate professor of finance at the University of New South Wales.

Dogecoin consumes 0.12 kilowatt hours of electricity per transaction compared with 707 for bitcoin, according to data center provider TRG.

Working with Doge devs to improve system transaction efficiency. Potentially promising.

— Elon Musk (@elonmusk) May 13, 2021

The token, whose logo features a Shiba Inu dog, has surged this year to become the fourth-largest cryptocurrency with a total value of $68 billion, according to Coin Market Cap.

Few major companies accept Dogecoin for payment, and its supply is unlimited.

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In contrast, bitcoin’s gains this year have been fueled by growing mainstream adoption for payment, as well as a store of value given its limited supply.

“Dogecoin remains a lesson in greater fool theory,” said David Kimberley, analyst at investing app Free trade, which posits that buying overpriced assets can be profitable, so long as there is a “greater fool” to buy them.

(Reporting by Tom Wilson in London and Tom Westbrook in Singapore Additional reporting by Hyunjoo Jin in San FranciscoEditing by Tom Hogue, Shri Navaratnam and Frances Kerry)