DeutschWhat influence do Tesla and Elon Musk still have on Bitcoin? Automobile manufacturer Tesla has sold 75 percent of its Bitcoins to improve its balance sheet. The news surprised numerous investors a few days ago. Until now, Elon Musk had always emphasized that he believed in the digital currency. Why did Tesla sell its Bitcoins and what impact did this have on the Bitcoin price?
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Tesla’s Bitcoin Sale Was before the Big Crash
As Tesla stated in its latest quarterly report, it generated revenue of $936 million from the sale of Bitcoins. Previously, Tesla had owned a proud 43,200 Bitcoins. Tesla should now have sold around 32,400 Bitcoins at an average price of approximately $28,900. Tesla does not specify the exact time of the sale in the quarterly report. Instead, it only mentions that the sale took place at the end of the second quarter.
It is also unclear whether Tesla sold all Bitcoins at the same time or only in installments. The price of Tesla had already fallen to around $21,000 by mid-June. On June 18, we even saw a price of just $17,700 at times. Since then, the crypto market has recovered, but BTC has not traded above $24,000 again.
This means that Tesla sold at least a large portion of the Bitcoins before the crash. Previously, the price stagnated for several weeks between $28,000 and $32,000.
Did Tesla and Elon Musk Trigger the Bitcoin Price Crash?
Many crypto enthusiasts accused Tesla of at least exacerbating the Bitcoin price crash. However, this accusation cannot be proven. The current trading volume of Bitcoin amounts to around 30 billion US dollars in the last 24 hours. In June, days with a trading volume of over 50 billion US dollars were not uncommon. Since Tesla itself only took in 936 million dollars through the sale of Bitcoins, the impact on the overall market should have been very small. In any case, we also don’t know whether Tesla might have sold off the Bitcoins bit by bit.
The real reasons for the crash in the crypto market are much more diverse. The geopolitical situation and the high inflation rates worldwide, which are causing central banks to raise key interest rates, are putting the entire financial market under pressure. Many investors are choosing to withdraw money from risk assets. Other investors are reacting to a lower inflow of money by liquidating their investments.
In addition, there are very specific problems in the cryptocurrency market that are negatively impacting the market. The bankruptcies of Celsius, Three Arrows and Terra (LUNA) have led to an immense loss of confidence in Bitcoin. The LUNA Foundation alone had to throw 80,000 Bitcoins back onto the market in order to maintain the value of the TerraUSD stablecoin. That still didn’t work. In comparison, Tesla’s 29,000 Bitcoins are significantly less important.
Meanwhile, Elon Musk has also commented on the BTC sale. They sold part of their Bitcoin holdings in particular because they could not estimate when the Covid lockdowns in China would ease. It was necessary to increase their own cash position.
Musk continued:
We are open to increasing our Bitcoin holdings again in the future, so this should not be understood as a judgment about Bitcoin.
Elon Musk: No more Influence on Bitcoin?
Tesla and Musk had a major impact on the entire crypto market in 2021. With simple tweets, Musk had caused the prices of cryptocurrencies to explode. In particular Dogecoin, Musk’s favorite currency, was mentioned very often by the entrepreneur on Twitter.
In March 2021, Tesla caused a great stir by accepting Bitcoin as a means of payment. Just two months later, the company changed its mind and cited the poor energy balance of Bitcoin as the reason. Both times, Tesla had a significant share in the fact that Bitcoin was reported on a lot in the media.
In April 2021, Bitcoin reached its then all-time high of around $63,800. In May, there was an enormous crash after China, among other things, introduced the mining ban. Again and again, Musk caused rising and falling prices on the crypto market with his tweets.
Over time, however, it became clear that investors were paying less and less attention to what Musk was saying. And that is damn important so that the market can become more independent of individual people. Decentralization may be given in the Bitcoin protocol, but too many investors continue to be guided by external influences. The fact that a single person with tweets could cause the prices of cryptocurrencies to change sometimes in the double-digit percentage range has not been a good sign.
Conclusion
Of course, investments by companies in cryptocurrencies will always have a certain influence on how the price develops. The fake report of the Litecoin launch at Walmart also led to a short-term price explosion. However, the influence of individual people should not be so great. Fortunately, that is now the case with Musk. At the same time, Musk has ensured in the past that Bitcoin and crypto are on the radar of significantly more people.
Further Insights
