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Musk continues disruption in crypto

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After sinking 10% during the weekend, Bitcoin was able to rally past $45,000 gaining stability due to Elon Musk's comments specifying his stance on Telsa's Bitcoin holdings. Myles Udland, Julie Hyman, and Brian Sozzi break down Elon Musk's position

Video transcript

MYLES UDLAND: All right, let's turn our attention now to what we have seen over in the crypto space all weekend. And really, the action comes Bitcoin. We just saw the chart up there. Bitcoin trading now in the mid 40 thousands after peaking around 60k and really-- I think Jared Blikre will walk us through this later-- really looking at a triple top here in the stock from that late March-- or, sorry, late February into mid-March into mid-April highs there.

What that means, I don't know. I guess the technical analysts will tell us that one. But Julie, we were chatting, unfortunately-- unfortunately, I'll let everyone know-- we were actually all chatting yesterday. So we ended our weekend a day early, but talking about how, look, another weekend comes and goes, and the main story is Elon tweeting stuff. I think stuff is what we can say at this point, right? About what his comments are on crypto.

JULIE HYMAN: Yeah, I mean, I thought that the initial stuff that sent Bitcoin lower that people were reading into was maybe a little vague and maybe-- I don't know-- did not exactly say what folks said it was saying. I mean, there was sort of a joke about Elon selling the Bitcoin holdings of Tesla at some point and that being revealed in several months. And all he replied was, "Indeed," which can mean kind of anything.

But people took it to mean that, indeed, he was selling. And then he backtracked and said no. Explicitly, he said, no, we have not sold. Of course, he keeps saying we have not sold, past tense. He doesn't say we will not sell. But nonetheless, I think what that chart also shows when you look at the year to date of Bitcoin, while it is extraordinarily volatile, it has been in a range. I mean, if you look at that, yes, you could argue that in recent days, maybe it's broken out a little bit to the downside. But it's been stuck in a range there, despite all of the big percentage swings that we have seen. So, a lot of sound and fury. We'll see if it ends up signifying anything.

BRIAN SOZZI: Yeah, let's stay focused on the charts here, guys. Good note in my box right now from Matt Maley over at Miller Tabak, chief market strategist, noting that Bitcoin is at very oversold levels right now. He says the RSI, the Relative Strength Index-- you know, we can talk about that later with our very own Jared Blikre-- is now back at the levels it was in April, just before Bitcoin bounced 25%. It's also back at the same levels as September 2020, just before he said, quote, "exploded to the upside" to the $10,000 level. So very interesting to see how Bitcoin will react to any further comments from Musk here. But clearly on the charts, it looks oversold.

MYLES UDLAND: Yeah, I think, Sozzi, this gets into one of those interesting-- I mean, we see this with stocks as well and Bitcoin now as a bona fide feature of financial markets I think is going to be subject to a lot of the same forces, which is that you can start to see the chart of, whether it's the S&P, whether it's an individual name, any kind of asset that is highly liquid and widely traded, which, of course, Bitcoin is as well. The chart-- and we've seen this play out-- the chart gets tired. No one really pays attention.

You assume, like, in the background-- Netflix is a great example of this. There have been so many periods over the last five or six years where Netflix stock has gone sideways or even down 10% or 20% over a 12 or 18-month period and kind of forgot about it. Because, remember, the FAANG moniker-- Facebook, Apple, Netflix, Google-- that was crowned in 2015. Really, now, it's two A's and an M-G on that, because now it's Alphabet, and then we've got-- or yeah, we've got Apple, Amazon. Then you've got Microsoft and Google.

Anyway, the point is that you kind of just assume, right, Netflix goes up all the time. But you have these periods where things cool off, and all of a sudden, you're looking at sort of dead money over a longish period of time. And I would argue that in Bitcoin world, in crypto world, three months is a long time. Three months of Bitcoin going nowhere after having broken to a record high after having tripled, basically, in a three-month period. That's going to be frustrating for a lot of people in the space.

And if you look at the results from Coinbase, out last week, there's a lot of new capital that has come into Bitcoin, come into crypto broadly. Sure, they may have bought ETH at 1,000, and now ETH's at 3,000, so, OK, all those people are happy. But there's not a lot of people, I would surmise, that are playing in the Bitcoin space, playing the crypto space-- see, there, I did it-- and don't have some kind of exposure to Bitcoin.

And so when the big guy goes nowhere for a long time, I think it does certainly bring into question some of the enthusiasm around the space. And maybe that's really what's behind the Doge bit, you know? Something more exciting to talk about, Doge still at $0.50 and, remember, going to go to $1, all that. But Doge was trading in fractions of a penny not too long ago, off about 4% this morning. All right, I'm sure we'll talk about crypto every day here on Yahoo Finance because it's the thing that moves the most here in these markets.

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