Musk and Bitcoin ??
Arjun Vir Singh
Curious about the Future of Finance & Tech | Partner @ Arthur D. Little | Podcast???Host | Angel??Investor | Author ?? | LinkedIn Top Voice ???| Confused ???? father to ???? | All views on LI are personal
Greetings crunchers!
Elon Musk liquidated 75% of his bitcoin holdings. The news comes as a bit of a surprise, especially since less than two weeks ago Musk said that he's "neither here nor there" on cryptocurrencies.
So what could have prompted the Tesla CEO to sell off such a large chunk of his bitcoin stash? According to some industry insiders, cash is king right now and Musk is simply playing the market. We'll just have to wait and see how this all pans out…
In the meantime, let's take a look at today's top headlines.
YESTERDAY'S MARKET MOVES
SOME FAMILIAR FINTECH & CRYPTO STOCKS
Note: The variance captures DoD movement in the price
WHAT’S NEW IN FINTECH?
Elon Musk is selling 75% of Tesla's bitcoin holdings
Although Tesla CEO Elon Musk was one of the first major CEOs to publicly endorse bitcoin, the electric car maker has since dumped three quarters of its holdings a year after claiming that bitcoin is a “long-term potential.”
Tesla stated that it has "converted about 75% of our Bitcoin acquisitions into fiat cash" in its second-quarter earnings report.
Investing $1.5 billion in bitcoin at the beginning of last year, Tesla was betting on the "long-term potential" of the digital currency.?
“As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency,”?
Tesla stated that those sales added $936 million in cash to its balance sheet.
It’s a rapid retreat for Tesla and CEO Elon Musk, who was a heavy crypto booster during last year’s runup, frequently tweeting about various digital currencies.
Analyst Brian Johnson at Barclays estimated earlier this week that Tesla would see a $460 million bitcoin-related impairment given the selloff.
“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,”?
“This should be not taken as some verdict on bitcoin,” Musk said in an earnings call on Wednesday, adding that Tesla is open to increasing its crypto holdings in the future.
Bitcoin has fallen by more than 50% to $20,000 this year, primarily because of the Fed's decision to withdraw liquidity to combat high inflation.
The liquidity exodus has exposed faulty risk management practices in the crypto universe, forcing many trading firms and miners – those responsible for minting coins – to offload their holdings to stay solvent.?
According to this article, Founder of Tron, Justin Sun, says we should consider this great news because:?
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It will be interesting to see if Musk's decision has any long-term effects on the company's share value or future plans. In the meantime, we'll just have to watch and wait.
What do you think about Elon Musk selling off Tesla's Bitcoin holdings? Let me know in the comments below!
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