As another weekend drew to a close Sunday (May 23), investors were digesting another few days of mixed signals around cryptocurrencies.
On Saturday (May 22), billionaire cryptocurrency fan and frequent commentator on digital currencies Elon Musk tweeted his support for cryptocurrencies in response to a question about whether prior comments he had made had hurt investors in the sector.
The questioner asked: “Yo Elon what do you think about the peeps who are angry at you because of crypto.”
Musk responded: “The true battle is between fiat & crypto. On balance, I support the latter.”
Fiat currencies are issued by governments and are not backed on any underlying asset such as gold.
Musk’s tweet posted at 6:25 a.m. Eastern time Saturday. Bitcoin shares were trading on the Coinbase exchange at $37,216 before the post and shot up to $38,195 over the next 90 minutes. As of 6:14 p.m. Sunday, Bitcoin was trading at $34,524.
Other major cryptocurrencies, including Musk’s beloved Dogecoin, tracked Bitcoin’s price over the weekend.
Bitcoin hit its high of $61,895 on April 14.
May has proven to be a volatile month even by the head-spinning standards of cryptocurrencies.
Cryptocurrencies on the whole took a big hit mid-week when authorities in China ordered financial institutions to avoid transactions involving digital currencies.
The joint statement from China Internet Finance Association, China Banking Association and China Payment and Clearing Association reads, in part, as translated by Google’s online translation tool: “Financial institutions, payment institutions and other member units must earnestly strengthen their social responsibilities. They must not use virtual currency to price products and services, underwrite insurance businesses related to virtual currencies or include virtual currencies in the scope of insurance liability, and must not directly or indirectly provide customers with other services.
“Services related to virtual currency, including but not limited to: providing customers with virtual currency registration, trading, clearing, settlement and other services; accepting virtual currency or using virtual currency as a payment and settlement tool; developing virtual currency exchange services with RMB and foreign currencies; developing virtual currency storage, custody, mortgage and other businesses; issuing financial products related to virtual currency; using virtual currency as investment targets for trusts, funds, etc.”
On Friday (May 21) China time, a Chinese official trained his regulatory fire on Bitcoin in particular.
Vice Premier Liu He told a meeting of the State Council Financial Stability and Development Committee, according to an official government website: “Financial risks should be prevented and controlled resolutely, with intensified efforts to scan and warn against risks, promote small- and medium-sized financial institutions to reform and defuse risks, and combat mining and trading of bitcoin, according to those at the meeting.”
Reuters Sunday quoted RBC Capital Markets analyst Amy Wu Silverman as having written in a research note: “Many point to bitcoin’s volatility as untenable. Indeed, Bitcoin makes severe and dizzying swings.”