Welcome back,
It was an eventful week in the world of crypto, with bitcoin slipping to $58,000, its lowest level in two weeks. Although the popular cryptocurrency recovered and traded above the $60,000 mark for most of the week, questions remain about how sustainable bitcoin’s comeback is.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Bitcoin fell below $60,000 this week
After a spate of factors including approval of a bitcoin ETF helped bitcoin cross $60,000 in recent days, the popular cryptocurrency fell again this week to below the $60,000 mark.
The cryptocurrency traded as low as $58,113 this week, just a week after the cryptocurrency had hit a fresh all-time high of almost $67,000 last week.
This means the cryptocurrency’s honeymoon period could potentially be coming to an end.
Bitcoin was very much the darling of markets at the start of the year before a number of countries such as China announced tougher scrutiny of the sector and even banned cryptocurrency mining in China. Policy U-turns by popular figures such as Tesla’s Elon Musk also kept the cryptocurrency volatile.
But still, bitcoin is up more than 116% since the start of the year.
Tesla may accept bitcoin again
That being said, in another apparent U-turn, Elon Musk doesn’t appear to have completely abandoned crypto payments yet. The company said in its third quarter earnings release this week that it may accept payments using cryptocurrencies for its services and products at some point in the future.
“We may in the future restart the practice of transacting in cryptocurrencies ("digital assets") for our products and services,” Tesla said in the filing.
The comments come as Tesla’s market cap exceeded the $1trn mark this week.
The company also announced that it purchased an aggregate $1.5bn worth of bitcoin in the nine months ending 30 September.
“In addition, during the three months ended March 31, 2021, we accepted bitcoin as a payment for sales of certain of our products in specified regions, subject to applicable laws, and suspended this practice in May 2021,” the filing said.
Musk’s comments, and U-turns are both important for the world of cryptocurrencies, as a number of endorsements, and announcements such as Tesla purchasing $1.5bn worth of bitcoin earlier this year, was a key factor propelling bitcoin and some other cryptocurrencies to record highs.
Crypto markets were badly affected earlier this year when Musk signalled Tesla would not accept bitcoin as payment due to concerns bitcoin mining is bad for the environment
El Salvador purchased $25 million worth of bitcoin
El Salvador added a further 420 bitcoins to its official bitcoin portfolio- worth $25m- the country’s president Nayib Bukele revealed in a Tweet this week.
The latest purchase paves the way for the country’s bitcoin holdings to total 1,120 coins.
The purchase can be seen as an attempt to capitalise on bitcoin's fall to $58,000 this week.
The purchase also follows El Salvador’s purchase of 150 coins in September when the country became the world’s first to officially adopt bitcoin as legal tender.
Back in September, El Salvador’s government started building bitcoin ATMs and created a $150m fund to help facilitate exchange between bitcoin and the US dollar.
The decision to make bitcoin legal tender came from the fact that El Salvador is highly dependent on remittances and the government hoped that making bitcoin the official currency in the country would make it cheaper to send money overseas.
However, the country’s adoption of bitcoin has been marred with chaos and even mass protests.
Here’s what happened in the cryptocurrency market in the last seven days:
- Bitcoin is flat at $61,899.
- Ether is up 9% to $4,382.
- Dogecoin is up 19% to $0.29.
- Cardano is down 6% to $2.
- Solana is up 6% to £200.
Iran set to pilot its central bank digital currency
The Central Bank of Iran is to pilot its own “national cryptocurrency” soon, says Bitcoin.com. The Islamic Republic is “studying potential risks and benefits” and will launch it “once the Money and Credit Council approves it”, said Ali Salehabadi, the governor of the central bank.
-
Rail fares could spike by 5.8% next year – how to save on train travelJuly’s RPI inflation reading tends to determine rail fare hikes in the following year. We look at how much your train tickets could cost, and how to save money
-
'Governments are launching an assault on the independence of central banks'Opinion Say goodbye to the era of central bank orthodoxy and hello to the new era of central bank dependency, says Jeremy McKeown
-
Tesla seeks approval to supply electricity to UK homes – could it disrupt the energy market?Tesla has applied for a license to supply UK households with electricity, but taking on the biggest providers could prove challenging
-
What's behind the big shift in Japanese government bonds?Rising long-term Japanese government bond yields point to growing nervousness about the future – and not just inflation
-
Tesla shares slump over Trump/Musk feudA war of words has sent Tesla shares spiralling to the company’s largest single-day value decline in history
-
Should you invest in Tesla?Tesla shares still look expensive, despite plunging 22% this year, but the robotaxi launch could see its value skyrocket. Is Tesla a good investment?
-
Halifax: House price slump continues as prices slide for the sixth consecutive monthUK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
-
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
-
Pension savers turn to gold investmentsInvestors are racing to buy gold to protect their pensions from a stock market correction and high inflation, experts say
-
Where to find the best returns from student accommodationStudent accommodation can be a lucrative investment if you know where to look.
