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Market Outlook: Airlines jump on summer roadmap, Tesla sinks as Bitcoin crashes

UK equities are mixed with blue chips unmoved but domestically focused mid caps just in positive territory
Market Outlook: Airlines jump on summer roadmap, Tesla sinks as Bitcoin crashes

When companies tie themselves to any one horse it presents risks, even if it’s the most-fancied filly at the post. Thoroughbreds are temperamental creatures and liable to break down when being ridden too hard. So, when Tesla tied its fortunes to Bitcoin with a $1.5bn investment, it was reasonable to expect there could be problems ahead. Yesterday, for various reasons Bitcoin crashed from an all-time high in a brutally swift drop that took prices from near to $58,000 to $47,400. At one point, prices plunged $5,000 in 10 minutes before paring losses and attempting a recovery, which stalled at $55k before turning lower to trade under $49,000 this morning.

Musk may have spooked some participants with his tweet saying the price was ‘too high’. But I feel that was an in-joke for followers. More importantly the market was ripe for a sharp technical pullback after a parabolic move, the kind that usually comes down under its own weight. There could be further to tumble - a 30 per cent drawdown as we had in January this year would see prices back to $40,000. Also, Treasury secretary Janet Yellen – clearly not a cheerleader - warned that "Bitcoin is an extremely inefficient way of conducting transactions and the amount of energy that's consumed in processing those transactions is staggering”.  

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