Elon Musk's concern that bitcoin (BTC) might be bad for the environment isn't enough to derail the cryptocurrency's potential for further price gains, said Bloomberg Intelligence commodity strategist Mike McGlone.
"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 reserve asset in a world of accelerating digitalization and electrification," McGlone wrote Thursday in a new report.
The report follows a 13% drop in the price of bitcoin, the most in a single day in almost four months. The drop was prompted by Musk, Tesla's CEO, saying late Wednesday the electric-car company was ending its bitcoin-for-cars offer made earlier in the year. That Feb. 8 announcement drove up bitcoin's price so dramatically – by 19% – that it was lionized by some fans of the cryptocurrency as "Elon's candle," in a reference to the resulting pattern on price charts.
Now, bitcoin analysts are scrambling to adjust their price forecasts and respond to concerns bitcoin's energy needs contribute to fossil-fuel burning, making it a climate threat at a time when environmental, social and governance concerns are becoming more important to institutional investors.
McGlone is considered a hot hand in cryptocurrency markets because he accurately forecast bitcoin's price rise to $50,000 last year, at a time when it was trading at just a fraction of that level.
Solar and wind
What matters the most, according to McGlone, is the source of the Bitcoin network's energy.
"The source of electricity is increasing from solar and wind, which are cost effective," according to the report. "On a global scale, electricity is going renewable."
Musk's remarks about the crypto's electricity consumption are "odd" coming from an automaker whose product is "fed solely by electricity," the analyst wrote.
McGlone wrote that bitcoin "shows comfort at the whole-number level around $50,000, which was our initial call on a 2021 target resistance value."
"The rule of money flowing to where it's treated best looks like an enduring tailwind for bitcoin," he wrote.
At press time, bitcoin was changing hands around $48,322, down about 10% over the prior 24 hours. The decline left the cryptocurrency's price up about 67% for the year to date.
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