The price of Bitcoin rose today, Wednesday, approaching the $40,000 mark, coinciding with a return of momentum to the cryptocurrency market, which is trying to regain some of the losses experienced during the volatile trading in May. The largest cryptocurrency increased by up to 5.2% in Wednesday's trading, reaching $39,588, while the Bloomberg Galaxy Crypto Index rose by 8%, alongside increases in other competing currencies like Ethereum, after the index recorded its worst performance ever last week.
Cryptocurrencies have fluctuated significantly in recent days after billionaire Elon Musk criticized Bitcoin's energy consumption, stating that his company, Tesla, has suspended accepting payments using the cryptocurrency. Stringent regulatory rhetoric regarding cryptocurrencies from the People's Bank of China (the central bank) exacerbated selling, leading to the unwinding of leveraged positions by investors.
In February, Elon Musk invested $1.5 billion from Tesla's funds into Bitcoin and stated that the electric car maker would accept it as a payment method, before the company reversed that decision in May. Although Musk has since claimed that he strongly believes in cryptocurrencies as long as they do not lead to a massive increase in fossil fuel usage, digital tokens are still suffering losses from the recent series of actions and comments.
Volatility, regulatory scrutiny, and concerns over Bitcoin's environmental impact have diminished the argument that the largest cryptocurrency will inevitably attract more mainstream investment. Currently, Bitcoin's price is about $25,000 lower than its all-time high of approximately $65,000 set in mid-April. Additionally, the value of over 7,000 tokens tracked by CoinGecko has decreased by about $800 billion, bringing the total market capitalization of the cryptocurrency market down to $1.76 trillion from its peak in May.
Over longer time frames, however, virtual currencies have still made significant gains, with Bitcoin rising by 342% over the past year, Ethereum increasing by more than 1000%, and Dogecoin's value surging by 14,000%.
