Bitcoin Turns Negative as Cryptocurrencies Seek Direction

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Created by TradeOr

3rd Party Analysis 21 May 2021

Key Takeaways

  • Cryptos dip amid weak effort by investors to sustain upside momentum
  • Musk promotes Dogecoin in a series of tweets, says he has not sold any Doge

Bitcoin Turns Negative

Bitcoin treads in negative territory after earlier on Friday the digital asset attempted to stage a bounceback. Bitcoin reached a daily high of $42,200, or a 5% increase on the day, but buying momentum wore out and, soon after, the asset dipped in the red, lower by 0.5%.

The popular coin is currently trading right under the $40,000 level as market participants are still at unease over the recent single-day market meltdown that wiped more than $300bn off the crypto space. On Wednesday, digital assets were rocked by a steep sell-off that resulted in a 30% drop in bitcoin’s price. Bitcoin later in the day rebounded from its lows and the decline was sealed at 11%.

Musk Promotes Dogecoin

Major cryptos on Friday remain pressured amid insufficient effort by traders and investors to create another leg to the upside. Ether is negative by about 2.5%. Dogecoin is barely in the green even after Elon Musk’s efforts to sustain the positive sentiment in the meme-coin.

The Tesla and SpaceX Chief Executive released a series of tweets supporting Dogecoin. Mr. Musk said he hasn’t and will not sell any of his Dogecoin holdings. “Yeah, I haven’t & won’t sell any Doge”, he posted on Twitter. Dogecoin is trading around $0.39, or 3% higher, on Friday.

Elon Musk renewed his criticism over Bitcoin and its mining process. “Bitcoin hashing (aka mining) energy usage is starting to exceed that of medium-sized countries,” he said in another tweet. Even though he turned against Bitcoin in the past couple of weeks, he confirmed several times Tesla is still holding its Bitcoin stack of over 40,000 Bitcoins.

Meanwhile, the US Treasury Department and the Federal Reserve are taking steps toward the crypto industry. The Treasury announced yesterday it will require businesses who transfer over $10,000 in cryptocurrency to report the transaction to the Internal Revenue Service (IRS). The move comes as part of a broader effort to tackle tax evasion practices.

The Federal Reserve, on the other hand, is starting to work on a paper that would explore if the central bank needs to develop its own digital dollar. A central bank digital currency (CBDC), according to Fed Chair Jay Powell, could be essential in order to sustain the dollar’s role globally.

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