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Despite the significant losses, McGlone believes that BTC is positioned for further price gains.
Senior Commodity Strategist at Bloomberg Intelligence, Mike McGlone, said Bitcoin remains a “Buy” despite Tesla‘s (NASDAQ: TSLA) comment on the digital coin over environmental issues. McGlone said Musk’s comment that Bitcoin may be bad for the environment is not a relevant factor to prevent the digital asset from increasing in value.
On the 12th of May, Musk revealed on Twitter that the EV company has “suspended vehicle purchases using Bitcoin.” Musk said that Tesla is “concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions.”
Elon Musk added that Tesla would hold on to its $2.5 billion worth of BTC it currently possesses. He noted that the automaker plans to resume BTC transactions when the digital coin mining transits to “more sustainable energy.”
The CEO stated:
“We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”
Musk cited data from researchers at Cambridge University, which revealed that Bitcoin’s electricity usage in 2021 is on the rise. According to the Cambridge Bitcoin Electricity Consumption Index, BTC utilizes more energy than some countries. They said Bitcoin uses more energy than the whole of Sweden.
Few minutes after the announcement, Bitcoin fell about 5%.
Tesla announced its $1.5 billion BTC investment in February, adding that the company will begin to accept BTC in exchange for any of its products. At the time, the price of Bitcoin surged about 19% to the news. Since the company has reviewed its consideration for BTC payment, Bitcoin has been on a steady decline. Bitcoin plunged to below $50,000 on the 13th of May. Also, BTC saw its most single-day loss of 13% in the last four months. At the time of writing, the king coin is still trading around $49,970. Additionally, BTC has lost 20.35% in its 24-hour trading volume.
McGlone Says Bitcoin Is a Buy despite Recent Losses
Despite the significant losses, McGlone believes that BTC is positioned for further price gains. In a report, McGlone wrote:
“Elon Musk saying Tesla is suspending purchases using bitcoin doesn’t shake our thesis that the crypto is in early price discovery days on its way to becoming the global digital asset in a world of accelerating digitization and electrification.”
Speaking further, McGlone said that the concern should be the source of the Bitcoin network’s energy. Commenting on Musk’s statement on Bitcoin’s electricity consumption, the analyst said the CEO’s remarks are “odd as the Tesla is “fed solely by electricity.”
Treasury Secretary Janet Yallen had previously expressed her worry over Bitcoin being extremely inefficient. Yellen warned about the danger of BTC.
“It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions,” said she.