/Bitcoin (BTC) briefly tops $40,000, struggles to recover from sell-off
Bitcoin (BTC) briefly tops $40,000, struggles to recover from sell-off

Bitcoin (BTC) briefly tops $40,000, struggles to recover from sell-off

A customer uses a bitcoin automated teller machine (ATM) in a kiosk Barcelona, Spain, on Tuesday, Feb. 23, 2021.

Angel Garcia | Bloomberg | Getty Images

Bitcoin fluctuated between gains and losses Thursday, as the world’s largest cryptocurrency struggled to recover from a major sell-off during the previous session.

The digital currency initially climbed Thursday morning, trading as high as $40,700 at one point, before slipping down as low as $38,965, according to data from Coin Metrics. It was last up 2.6% at a price of $39,980.

Some of bitcoin’s younger alternatives also attempted a comeback Thursday, with ether up 2.2% at $2,676 and litecoin rising 3% to $209.

It comes after a brutal plunge for cryptocurrency markets. On Wednesday, bitcoin dived 30% to nearly $30,000 at one point, before paring some of those losses later in the session. The entire crypto market lost hundreds of billions of dollars of value in a single day.

The move lower was likely driven by mixed signals from Tesla CEO Elon Musk — who came out as a believer in bitcoin earlier this year — and a regulatory clampdown on the market in China.

On May 12, Musk said his electric car firm had suspended vehicle purchases with bitcoin due to environmental concerns over the cryptocurrency. Bitcoin uses more energy than entire countries like Argentina and Ukraine, according to Cambridge University researchers. This is due the energy-intensive “mining” process which releases new bitcoins into circulation.

Earlier this week, Musk suggested Tesla may have sold his bitcoin holdings, only to later clarify that the firm had “not sold any bitcoin.” On Wednesday, he tweeted the “diamond hands” emoji, implying that the electric vehicle maker would not shed any of its bitcoin.

Also weighing on bitcoin’s price Wednesday was the news that China had banned financial institutions and payment firms from providing cryptocurrency-related services, reiterating its tough stance on digital currencies.

“If you look at the history of bull markets, a correction of this size, between 30-40% of bitcoin price, tends to be part of the bull market,” Alyse Killeen, founder and managing partner of bitcoin-focused venture capital firm Stillmark Capital, told CNBC Wednesday.

Institutional investors jumping ship?