Bitcoin investors have sold in May. It remains to be seen if they’re going away for good.
Bitcoin prices (XBT) fell 8% Friday and have plunged about 36% in May — their worst monthly performance since September 2011. A steady torrent of bad news has sent bitcoin spiraling downward since it hit an all-time high above $64,000 in April. Tesla (TSLA) CEO Elon Musk did an about-face on bitcoin, telling customers recently that the electric car giant will no longer accept bitcoin as payment for its vehicles because of concerns about the environmental impact of bitcoin mining, which is extremely energy intensive.
Musk has since softened his stance a bit, agreeing — thanks to the prodding of software CEO and crypto evangelist Michael Saylor of MicroStrategy (MSTR) — to meet with the heads of several bitcoin miners based in North America to talk about energy usage concerns. China also has stepped up its crackdown on crypto and the United States Treasury department has unveiled new plans to tax bitcoin more heavily while the Federal Reserve has hinted about the possibility of a digital dollar.
The bitcoin crash has spilled over to other cryptocurrencies, too. Binance coin, XRP and Polkadot have suffered massive losses this month. Other cryptos, most notably ethereum — the second largest after bitcoin and the backbone for many popiular non-fungible token (NFT) deals — have held up better. Ether has fallen only about 6%. Meme token dogecoin, which Musk has repeatedly tweeted about, is down slightly in May. So-called stablecoins, such as Tether and USD Coin, which are tied to government-backed currencies, have lived up to their name and are flat for the month. Bitcoin is notoriously volatile and prices remain up more than 25% this year despite May’s meltdown. So long-term fans, or HODLers as they like to call themselves, have been down this road numerous times before. “It is really easy to be a crypto investor. It’s extremely difficult to be a crypto trader,” said Peter Smith, CEO of Blockchain.com, a crypto research, investing and lending startup that is valued at $5.2 billion. “It is a very high volatility market and it can crush you easily.”