Bitcoin extremely inefficient for transaction, says US Treasury Secretary Janet Yellen

US Treasury Secretary Janet Yellen on Monday termed cryptocurrency bitcoin as an "inefficient way of conducting transactions". She was speaking at a virtual conference on Monday hosted by the New York Times.

"Bitcoin is an extremely inefficient way of conducting transactions and the amount of energy that's consumed in processing those transactions is staggering," said Yellen.

“I don’t think that Bitcoin is widely used as a transaction mechanism,” she added.

Her remarks added fuel to the fire and was one of the main reasons for a drastic fall in its levels.

The traders, however, say that the downfall is linked to sell-off in global equities which has curbed risk appetite. Some investors have also cited concerns about the rapid surge in the virtual currency's price.

The most popular cryptocurrency fell to $47,400, a one-week low. At one point, it lost nearly 17 per cent of its value, or about $160 billion wiped out from its total market capitalisation. Its market cap on Monday slid to $983 billion, after hitting more than $1 trillion on Friday.

Bitcoin rallied on Sunday to a peak of $58,354, with its latest bout of weekend price moves taking its gains so far this year to almost 100 per cent.

Bitcoin's meteoric rise to over $50,000 has been fuelled by signs that it is gaining acceptance among mainstream investors and companies, from Tesla Inc and Mastercard Inc to BNY Mellon.

Bitcoin proponents argue that the cryptocurrency is "digital gold" that can hedge against the risk of inflation sparked by massive central bank and government stimulus packages designed to counter the impact of coronavirus disease (Covid-19).

However, many analysts and investors remain skeptical of the patchily regulated, highly volatile digital asset, which is little used for commerce.

(With inputs from agencies)