The world's most popular cryptocurrency has seen its price surge this year as more companies embrace it as a mainstream form of payment. But Bitcoin's price plunged by almost 10 percent to below $45,000 for the first time in nearly three months before edging upwards to just under $46,000. It had been trading as high as $50,000 on Friday.
Over the weekend, Mr Musk suggested the firm is considering selling or may have already sold some of its holdings in the cryptocurrency.
Bitcoin's price drop was triggered by a tweet sent to the Tesla boss, which said: "Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their Bitcoin holdings.
"With the amount of hate [Elon Musk] is getting, I wouldn't blame him."
Mr Musk simply replied: "Indeed." © GETTYelon musk bitcoin tesla
© GETTYelon musk tesla bitcoin
He later followed up that Tweet, and wrote: "To clarify speculation, Tesla has not sold any Bitcoin."
The latest blow for Bitcoin comes a week after the Tesla chief executive said the company had stopped accepting Bitcoin as payment for its cars because of fears over its carbon emissions.
He announced the carmaker had stopped vehicle purchases with the cryptocurrency because of "rapidly increasing use of fossil fuels for Bitcoin mining".
The Tesla boss tweeted: "We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.
READ MORE: Elon Musk blasted by expert for 'counterproductive' Bitcoin suspension © GETTYbitcoin price latest
Bitcoin's price had surged to a record high of $64,895.22 in mid-April.
But the world's most popular cryptocurrency has struggled badly since, plummeting towards $47,000 less than two weeks later before recovering to around $58,000 at the start of May
Paolo Ardoino, chief technology officer at crypto exchange Bitfinex, said: "Bitcoin's critics will once again pounce on the many colorful personalities that seek to connect themselves with the space.
"However, it is important to remember that bitcoin is much bigger than the celebrities of today or indeed the makers and shakers in the space."
'Problem's brewing' for Bitcoin as its future plunged into doubt [REPORT]
Bitcoin future 'unclear' as Elon Musk turns his back [COMMENTS]
Elon Musk slammed by crypto experts for 'Doge-for-Tesla' tease [REACTION] © GETTYbitcoin price latest update
Tesla announced on February 8 t had bought $1.5 billion of Bitcoin and would start accepting it as a form of payment for its vehicles.
But Mr Musk has faced pressure of the impact the cryptocurrency has on the environment.
Bitcoin currently uses about the same amount of energy annually as the Netherlands did in 2019, according to data from the University of Cambridge and the International Energy Agency.
Laith Khalaf, an analyst at AJ Bell, said: "Environmental matters are an incredibly sensitive subject right now, and Tesla's move might serve as a wake-up call to businesses and consumers using Bitcoin, who hadn't hitherto considered its carbon footprint.