Elon Musk’s Bitcoin Investments: After a change in internal policies, the renowned electric car company Tesla diversified its investments and gave way to digital assets on its financial balance sheets.
For the year 2021, specifically the month of February, Tesla decided to acquire 1,500 million dollars in digital currencies, which boosted the crypto assets market where Bitcoin managed to reach historical highs of 43,000 dollars. However, in the bitql cloud, you will find more information about it.
But like any market, when it rises, it also tends to fall, and more so in the case of a digital asset whose valuation depends on the opinions generated in the environment, because in this case, the public statements of Elon Musk, the businessman and owner of Tesla, not only made raise the market but also made it fall.
After considering that it was not appropriate to accept Bitcoin as a form of payment for their vehicles since it goes against their environmental policies, they never thought of getting rid of the millionaire investment in Bitcoin.
After the year 2022 has kept the crypto market down, Musk decides to sell his Bitcoin. As a result, a downward trend of more significant impact could further reduce his invested capital.
Why, if they were diamonds, did he sell them?
The crypto market is going through a period of constant decline, where many have managed to sell their digital assets considering that the market continues to decline and does not seem to have a well-defined floor.
It was the main reason why Tesla considered the option of selling 75% of its Bitcoin, thus avoiding a more significant number of losses since it cannot be defined when the crypto winter will end.
The sale is not really because Elon Musk stopped believing in Bitcoin as a digital currency and its promising characteristics for the future; the fact is that a new stage of isolation could be generated after the reappearance of Covid-19 in China.
The impact that this virus can generate on society and the world economy is unknown, which is why the Tesla Company must be prepared with a capitalization that allows it to respond to any financial emergency that may lie ahead.
Tesla protects itself from losses or quarterly update
More than the influence or impact that Tesla can have on cryptocurrencies, it is its owner who convulses the market when he issues his opinions regarding this volatile market.
During several months of the year 2021, he created multiple opinions that he made public through social networks, which disclosed the information and managed to increase and decrease the price of Bitcoin. Still, the profitability that Tesla’s investment could have been astronomical.
At the time of making calculations, the initial investment in Bitcoin, if they had been sold at their historical maximum of November 2021, would have generated what they could have received for 12 years selling electric vehicles in just a few months.
The decision to sell has nothing to do with the fact that Tesla does not want to reinvest in Bitcoin; the reality is that we are facing a reasonably complex economic and financial situation where a recession could be generated. Therefore, the company must maintain a considerable cash flow.
In addition to protecting himself from more significant losses if the crypto market continues to decline, he prefers to issue a quarterly report where he closes with profits, making investors consider investing in shares of his company and increasing their capital.
How does this sale influence the crypto market?
The sale details were not clarified if the quantity sold was disclosed in a percentage form equivalent to 75%. However, its average price was estimated at 28,900 dollars. Therefore, for those who analyze it, it can be evidenced that this sale contributed to the bearish market since it was the previous months.
It can be inferred that the impact of this sale was generated in the previous quarter, which was when Bitcoin went through a more relevant fall; Tesla could be considered one of the Bitcoin whales and, given the massive sale of its digital assets, expected that it would cause a substantial effect on the displacement of the curve.
The capitulation of the miners and the millionaire sale of Tesla brought the price of Bitcoin to almost $20,000.
It may be that during the remainder of July, the impact of this sale will not be relevant since it was generated in another period, and Bitcoin could continue to recover.
Conclusion
In the face of a global economic and financial scenario that is quite affected, companies will prefer to protect their cash flows; it is not known that it can happen not only in the digital financial market but also in the traditional one; a timely decision to be able to recover more capital and reinvest in cryptocurrencies.