It’s true, Tesla already offered virtually a billion {dollars} in BTC and the market took it like a champ. Of course, the value fell under the earlier all-time excessive for the primary time in bitcoin’s historical past, however there are clear causes for that. The Tesla dump wasn’t amongst these causes till yesterday evening, when the corporate’s quarterly replace for Q2 hit the Internet. Now, the whole lot is smart
Tesla’s report says:
“Quarter-end cash, cash equivalents and short-term marketable securities increased sequentially by $902M to $18.9B in Q2, driven mainly by free cash flow of $621M, partially offset by debt repayments of $402M. As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet.”
As for the explanation, let’s quote CNBC:
“Musk explained on Wednesday’s call, “The reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the covid lockdowns in China would alleviate so it was important for us to maximize our cash position.” He added, “This should be not taken as some verdict on Bitcoin.”
The Twitter-addicted CEO hasn’t addressed the difficulty on the social media platform. Yet.
Tesla ‘s Paper Hands, What Do They Say About Bitcoin?
Let’s recap. First, Do Kwon’s ill-fated experiment of an algorithmic stablecoin failed miserably. The Luna Foundation Guard needed to promote roughly 800K cash to attempt to defend the UST peg to the greenback. The bitcoin market suffered, certain, however it proved it had the liquidity to handle this monumental sell-off.
And now we discover out that, roughly on the similar time, Tesla was additionally promoting. Did they panic promote as a result of they obtained scared by Do Kwon’s antics? Hard to inform. At what worth did they promote? Hard to pinpoint. The solely factor we all know for certain is that they offered one other billion {dollars} value of BTC and the market took a budget sats out of their fingers with out flinching. Sure, the value declined to depths beforehand unknown, however it’s already bouncing again.
Then, when Tesla introduced the sell-off, the market reacted emotionally. Our sister website NewsBTC informed:
“According to the reports, the company has converted its Bitcoin holdings into fiat currency. In consequence, Bitcoin was rejected close to the $24,000 price point and now trades at $23,100 with a 2% loss over the past hour. The cryptocurrency still records a 20% gain over the past week and market sentiment still leans optimistic about the potential for future profits.”
At the time of writing, bitcoin is buying and selling at $22.634, so the belief that Tesla has paper fingers did have an effect. However, it wasn’t as unhealthy as everybody was anticipating. Especially making an allowance for that, again within the day, Tesla’s preliminary bitcoin funding was a key think about sending BTC to the stratosphere.
BTC worth chart for 07/21/2022 on Bitstamp | Source: BTC/USD on TradingView.com
What Will History Say About Tesla’s Decision?
Considering Elon Musk hasn’t done the smallest effort to try to perceive bitcoin, the corporate’s sell-off shouldn’t shock us. Still, it does. It doesn’t look like Tesla was making an attempt to decorate up its books. It doesn’t look like they profited from the sale, some stories even estimate that they misplaced cash on the commerce. The “covid lockdowns in China” look like a weak excuse. And, what does “maximize our cash position” imply on this context? We’ll have to attend and see what the corporate does with the money.
The truth is, it looks like Tesla panic offered. If this proves to be true, count on to see tweets, memes, and assume items on how a lot the corporate would have made if their fingers weren’t fabricated from lettuce each time bitcoin pumps. In truth, count on to see all of these regardless. The present is simply getting began.
Featured Image by Tesla Fans Schweiz on Unsplash | Charts by TradingView
