In late-morning trading in London on Wednesday, Bitcoin was trading at around US$39,703, down 12.1% over the last 24 hours and leaving it with a market cap just shy of US$743bn.
Tesla stock opened 5% lower at US$551.3 after Wednesday’s opening bell on Wall Street, down roughly 36% since the Bitcoin purchase.
The recent tumble means the digital currency is trading at around the same level as it was on February 7, the day before Tesla’s billionaire boss Elon Musk revealed that the company had purchased around US$1.5bn worth of Bitcoin. Just before the announcements, Bitcoin was trading at around US$38,460.
Tesla’s move initially sparked a fresh surge of buying activity for Bitcoin and other cryptocurrencies, with the digital coin reaching an all-time high of around US$63,346 on April 16.
However, since then the price of Bitcoin has declined dramatically in several sharp drops, effectively wiping out any gains Tesla made from the bull market sparked by the announcement.
Ironically, many have attributed Bitcoin’s recent falls in value to Musk himself, with his decision to stop Tesla from accepting Bitcoin as a payment method due to environmental concerns, not long after approving the move, sent the crypto’s value tumbling.
Matters were made worse earlier this week when Musk issued a tweet that seemed to imply he was considering offloading the company’s current Bitcoin stash. While he went on to clarify that Tesla had not sold any Bitcoin, the price failed to recover completely.
However, Musk is not the only factor behind Bitcoin’s decline, with the large energy usage involved in its creation as well as potential regulatory risks around crypto usage causing both retail and institutional investors to reassess the potential of crypto.
The latter of these issues was thrown into stark relief on Wednesday when the People’s Bank of China issued a post on social media saying that financial and payment institutions should not accept crypto as a payment method or offer services related to digital currencies.