What happened
Shares of Hong Kong-based cryptocurrency company Diginex (EQOS) popped by as much as 18% at one point Monday morning for no obvious reason other than a couple of pieces of positive news for the broader crypto space.
So what
After weeks of extreme volatility and an overall sharp drop in prices, cryptocurrencies got some good news Monday when Elon Musk announced that Tesla (TSLA 1.65%) would start accepting Bitcoin (BTC -1.74%) again -- once the large operators who mine the tokens prove that they are shifting to greater use of clean energy sources.
In February, Tesla purchased $1.5 billion worth of Bitcoin and said it would begin accepting the digital currency as payment for its electric vehicles. But Musk reversed course on that in May due to his concerns about the high electricity costs of mining Bitcoin, and the fact that those mining operations have largely been powered by heavily carbon-emitting energy sources such as coal.
Another billionaire, hedge fund manager Paul Tudor Jones, also gave Bitcoin a nice endorsement Monday.
"I like Bitcoin as a portfolio diversifier," Tudor Jones said during an interview on CNBC. "Everybody asks me what should I do with my Bitcoin? The only thing I know for certain, I want 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities.
Image source: Getty Images.
Now what
Diginex has been volatile, and as of 11:31 a.m. EDT, had given back most of its big pop, only trading about 2.3% higher on the day.
The company has been a tough one to figure out. On one hand, the firm Iceberg Research in April issued a short report on Diginex, citing "red flags" and an unreliable transaction history. But shortly after that, Diginex reported record volume on its trading platform.
Diginex stock is up roughly 32% in the last six months and the numbers look promising. It could be a good opportunity, but I would take a hard look at the Iceberg Research short report's claims and make sure the underlying business justifies its valuation before investing.