Crypto Insights 14/05/2021

by Alex Clark

Cryptocurrency took a market-wide hit yesterday following Elon Musk’s announcement that Tesla has suspended vehicle purchases using Bitcoin due to climate change concerns. Musk claims the company is concerned about the “rapidly increasing use of fossil fuels for bitcoin mining and transactions”, although Musk is hardly ill-informed when it comes to both technology and the environment, so it is somewhat surprising that he has only just woken up to the fact that Bitcoin is less than green. Musk did add that Tesla would not be selling any bitcoin, and instead would be using it for transactions as soon as mining transitions to more sustainable energy. He also noted that they would be looking at other cryptocurrencies that use less than 1% of bitcoin’s energy. In just an hour, Bitcoin plunged more than $5,000, from above $52,000 to less than $48,000, though it quickly recovered roughly half of that loss, reaching $50,429. Meanwhile, Dogecoin’s price surged 30% after Musk said he is "working with doge devs to improve system transaction efficiency," adding it's "potentially promising". Whether or not there are in fact doge ‘devs’ remains a mystery, but the tweet’s reference to “efficiency” seemed to lend weight to the idea Tesla may add DOGE as a form of payment. Coinbase, known for being particularly choosy in the cryptocurrencies it allows to list, will be listing Dogecoin in the next six to eight weeks. This is part of a new policy to be more inclusive with its listings in a bid to bring in new revenue. In the future the company will start listing what are called “debut” coins that have just been minted and are seeing their first day of trading volume. Celsius’ CEO has said “bitcoin’s prospects are still intact even without the input of Tesla… Bitcoin is up 20,000,000% in the last decade, the best performing asset class in this time period, and the industry is going to do just fine without Elon.” Huobi Group is deploying $100 million into DeFi projects as well as setting up a $10 million NFT fund focused on investing in NFT collectibles and marketplaces through its new consolidated investment arm, Huobi Ventures. Investment bank Cowen has announced it will offer crypto custody services for asset managers and hedge funds. Lastly, Tether revealed the breakdown of its reserves for the first time in a composition report. The report, which was conducted by a small audit firm in the Caribbean, attests that Tether is fully backed, although they have been somewhat candid about exactly what it is that’s backing the token.

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