Bitcoin crashes after Tesla abandons the cryptocurrency as a payment method, the crypto world criticizes Elon Musk and DOGE staves off competition from a furry rival.
Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.
Top Stories This Week
Already losing dominance in the crypto rankings as altcoins were gaining strength, things went from bad to worse for Bitcoin this week as Elon Musk made a shock announcement.
On Twitter, the billionaire CEO declared that purchases of Tesla cars using BTC had been stopped amid concerns about the cryptocurrency’s impact on the environment.
Although Musk said Tesla had no plans to sell any more of its Bitcoin, he confirmed that the company is looking at other cryptocurrencies that are much less reliant on energy.
BTC went into freefall following the sudden statement, which appeared to take traders by surprise. It tumbled as low as $46,980.02 and has struggled to remain above $50,000 since.
Unsurprisingly, Musk’s statement was met with a barrage of fury from the crypto community.
Given that this blockchain’s energy use is nothing new, many were confused as to what’s changed since Tesla invested $1.5 billion in Bitcoin just a few months ago.
Some have accused the CEO of engaging in a “pump and dump” scam by manipulating the market with his 280-character missives. Others insisted that miners primarily use renewable energy — but data suggests this might be a slight embellishment. While 76% of miners use renewable energy some of the time, the University of Cambridge estimates just 39% of total power consumed by proof-of-work cryptocurrencies is eco-friendly.
Barstool Sports founder David Portnoy also ripped into Musk, accusing him of “playing with people’s futures and their fortunes.”
Others pointed out that proof-of-work is crucial for Bitcoin, and attempted to reassure investors that the cryptocurrency is proving resilient to criticism.
Saifedean Ammous, author of The Bitcoin Standard: The Decentralized Alternative to Central Banking, also didn’t mince his words, telling Musk: “Unless you’ve also switched your rockets and battery manufacturing to ‘more sustainable energy’ you’re going to look like a clueless big hypocrite here. The world needs sound money far more than it needs your rockets & government-subsidized electric cars.”
ETH inevitably got caught up in the crypto market tanking. But prior to the Tesla drama unfolding, it was stealing the show by reaching a slew of astronomical milestones.
The world’s second-biggest cryptocurrency surged as high as $4,362.35 — briefly propelling its market cap above $500 billion for the very first time. This came hot on the heels of ETH entering unprecedented territory by surpassing the $4,000 mark on Monday.
Ether’s parabolic surge gave it a valuation that was bigger than the likes of Visa and JPMorgan too.
While any lasting impact from Tesla’s announcement remains to be seen, analysts believe that ETH hitting $5,000 is still a matter of if, not when.
Musk’s fingerprints haven’t just been on Bitcoin this week. It seems like a lifetime ago that he hosted Saturday Night Live — and sent DOGE’s price tumbling after the eccentric entrepreneur described the joke cryptocurrency as a “hustle.”
Dogecoin lost 40% of its value in a 24-hour period from last Saturday to Sunday, hitting lows of $0.43. Whereas some analysts had been expecting that the altcoin would rally after the broadcast, the opposite ended up being true.
However, warnings of a devastating crash reminiscent of XRP’s fall in 2018 have been unfounded… at least for now. In recent days, DOGE has headed back up above $0.50 on the back of two pieces of good news.
The altcoin reacted enthusiastically after Musk revealed that he is working with Dogecoin’s developers to improve the cryptocurrency’s efficiency. A few days earlier, he had released a Twitter poll asking whether Tesla should accept DOGE as a payment method. The markets were also cheered by Coinbase, confirming that it plans to list Dogecoin in the next six to eight weeks. All of this resulted in DOGE being one of the few gainers in a sea of red.
This wasn’t the only drama to face DOGE this week, with a number of “Dogecoin killers” bursting their way onto the scene. One of them was Shiba Inu, which surged dramatically after being listed by a number of high-profile exchanges.
Unfortunately, Shiba Inu’s bark turned out to be much worse than its bite. The coin’s website said 50% of token supply had been sent to Ethereum co-founder Vitalik Buterin as a “burn” gesture given how he was unlikely to use it. But in a shock twist, Buterin made full use of the uninvited donation — giving a large chunk of his SHIB tokens to a fund providing relief to India as it battles COVID-19. Prices have since collapsed.
Fresh from listing on the Nasdaq, Coinbase released Q1 revenues on Thursday — and, as expected, the bull market helped the exchange secure a very healthy set of numbers.
Total revenues came in at $1.8 billion or $3.05 per share, slightly less than the $3.07 per share that analysts had been expecting. Nonetheless, this is three times higher than the $585 million generated in the preceding quarter.
Net profits also surged to $771 million, quadruple what was seen in Q4 and 24 times higher than the first quarter of 2020.
Coinbase stopped short of providing detailed guidance for future performance, warning: “It is important for investors to remember that our business is inherently unpredictable.”
Unfortunately, none of this translated into a boost for COIN’s share price, which has drifted closer and closer to the reference price of $250 seen when it made its debut in mid-April.
Veteran Wall Street analyst and New Constructs CEO David Trainer expects Coinbase’s stock to decline to $100 or even lower as increasing competition bites, warning, “The company is unlikely to meet the future profit expectations baked into the stock price.”
Winners and Losers
At the end of the week, Bitcoin is at $49,594.02, Ether at $4,028.01 and XRP at $1.40. The total market cap is at $2,329,213,762,738.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Shiba Inu, Polygon and Revain. The top three altcoin losers of the week are Dogecoin, Holo and Siacoin.
For more info on crypto prices, make sure you read Cointelegraph’s market analysis.
Most Memorable Quotations
“We see Web3 as the future of the internet, where everyone has ownership and control of their own content.”
Matthew Gould, Unstoppable Domains CEO
“We know that replacing Gold as a store of value will help the environment […] and shrinking big bank and coin usage will benefit society and the environment.”
Mark Cuban, billionaire investor
“These moments have historically been good buying opportunities as they indicate panic on the market.”
“The emergence of digital property rights, whether via Bitcoin or NFTs, is perhaps the greatest opportunity for financial inclusion for the bottom three billion frontier and emerging market consumers.”
Manuel Stotz, Kingsway CEO
“The world needs sound money far more than it needs your rockets & government-subsidized electric cars.”
Saifedean Ammous, Bitcoin Standard: The Decentralized Alternative to Central Banking author
“Coinbase will likely not be able to sustain blowout earnings going forward as competition enters the market.”
David Trainer, New Constructs CEO
“Long-term, I’m still very bullish on Bitcoin and don’t believe that this announcement will significantly impact price or adoption.”
Adrian Przelozny, Independent Reserve CEO
“Barring some black swan event, I don’t see this rally ends any time soon.”
Lex Moskovski, analyst
“DOGE is a fad, within a growing movement that is here to stay.”
Nick Spanos, Zap Protocol founder
“There are thousands of coins, and DOGE is in that category that really are useless. They’re just utility tokens that have no underlying value or use case, and they’ll eventually disappear.”
Mark Yusko, Morgan Creek Digital Management founder
Prediction of the Week
Although there has been a short-term shock for Bitcoin, there’s no shortage of optimism when it comes to the long-term forecast.
Just look at Morgan Creek’s Mark Yusko, who believes BTC has a strong chance of trading at $250,000 per coin by 2025.
His prediction is based on an assumption that Bitcoin will rival gold by “monetary value.”
Yusko’s appearance on CNBC did come with a sting in the tail for investors who prefer altcoins. He added: “There are thousands of coins, and DOGE is in that category that really are useless. They’re just utility tokens that have no underlying value or use case, and they’ll eventually disappear.”
FUD of the Week
Binance is reportedly under investigation by both the United States’ Department of Justice and Internal Revenue Service.
According to Bloomberg, the two government agencies are looking into Binance Holdings Ltd. as part of an investigation into U.S. residents using cryptocurrencies for illegal transactions.
Officials are reportedly seeking information from Binance employees and customers, but not all their inquiries are necessarily tied to allegations of wrongdoing.
A Binance spokesperson said the company took their legal obligations “very seriously and engage with regulators and law enforcement in a collaborative fashion.”
The U.S. Internal Revenue Service, or IRS, is prepared to seize the holdings of cryptocurrency owners who are struggling to pay their unpaid tax debts, sending a strong signal that the agency is treating digital assets the same as any other type of property that can be confiscated.
Robert Wearing, deputy associate chief counsel for the IRS, told a virtual conference held by the American Bar Association that the government classifies digital assets as property. As such, these assets may be confiscated to satisfy outstanding tax debt that hasn’t been repaid.
According to Bloomberg, he said: “The IRS will seize that property and will attempt to follow its usual procedures to sell it and use it to satisfy collection.”
BTC and other cryptocurrencies are classified as property from the perspective of U.S. federal tax law.
Turkish customs enforcements brought down a smuggling operation in what is said to be a record bust against illegal Bitcoin mining equipment in the country.
After receiving a tip, Turkey’s Customs Protection’s anti-smuggling and intelligence teams raided a warehouse earlier this week in İzmir, where they found 501 ASIC Bitcoin mining rigs in closed cardboard boxes.
Customs enforcement reported the estimated value of the seized equipment at $600,000. Four suspects were detained as part of the investigation.
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