Bitcoin drops further below key $50,000 level after Yellen calls it ‘extremely inefficient’

Bitcoin and other cryptocurrency prices tumbled on Tuesday, after a sharp warning from Treasury Secretary Janet Yellen.

“It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering,” Yellen said in an interview with the New York Times’ Dealbook late on Monday. It isn’t the first time she has criticized the cryptocurrency, which she said is often used for illegal transactions.

However, Yellen, also said digital currencies were likely here to stay and that a “digital dollar” could serve as an easier payment system for many Americans who don’t have that access.

The price of bitcoin
BTCUSD,
-12.56%
was last down 14% to $47,891, a level it hasn’t seen in around a week, but it is still up 73% so far this year. Losses weren’t limited to bitcoin, with prices of ether, the currency that runs atop the ethereum 
ETHUSD,
-17.16%
platform, off 20% and for XRP 
XRPUSD,
-21.11%,
 which is pegged to Ripple, down 22%.

The former Federal Reserve chair has made clear since taking over the Treasury that her department will take a close look at bitcoin, with possible regulation to come.

She’s only a “temporary game-stopper,” said Stephen Innes, chief global markets strategist at Axi, in a note to clients. “Besides the enormous Middle East consortium interest in the bitcoin ETF trading on the Toronto exchange that needs to hedge physical, but if corporates start to add physical coins to the balance sheet this year, that is the game-changing panacea,” he said.

Bitcoin recently topped a $1 trillion in market value for the first time, and big moves seen this year have drawn in more investors and interest from companies such as electric-car maker Tesla
TSLA,
-8.55%,
which revealed earlier this month a $1.5 billion investment in bitcoin and plans to accept it as payment in future. And credit-card giant Mastercard
MA,
+2.25%
has also said it would allow merchants to accept some cryptocurrencies on its network later this year.

Read: Tesla bitcoin gambit already made $1 billion, more than 2020 profit from car sales, estimates analyst

But bitcoin had volatile start to the week, dropping on Monday in a move that some blamed on Tesla
TSLA,
-8.55%
Chief Executive Elon Musk. Over the weekend, he tweeted that “BTC & ETH do seem high lol” in response to Euro Pacific Capital Chief Executive Peter Schiff, who defended gold over bitcoin. “Gold is not BS. It’s real money and better than both!”

That back-and-forth between Musk and Schiff continued on Tuesday, with the latter criticizing the electric-car CEO’s bitcoin approach. Musk responded with an eggplant emoji, which some inferred was his way of dismissing the comment. That emoji was banned by social media group Facebook on its Instagram unit over phallic symbolism and foods.

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