Tesla sold its Bitcoin holdings, the message is very clear

The years have passed and are not the same. Tesla, the American electric car manufacturer, is no longer one of the largest Bitcoin holding companies. By publishing its second quarter accounts, it announced the reselling 75% of its Bitcoin holdings in the amount of 936 million dollars. His investment was lost for two months.

After the ambition to expose themselves, the reason is to protect themselves. It’s the return of banknotes and the divorce of digital assets … A real turnaround we didn’t expect from Tesla. The purchase of this $ 1.5 billion worth of Bitcoin in February 2021 contributed to the strong momentum that brought the token to more than $ 58,000 the following month.

Along with MicroStrategy, the company that owns the majority of Bitcoin, Tesla is one of the figures in the institutional adoption of cryptocurrencies.

But its management, under the influence of Elon Musk, has shown us that the relationship between Tesla and Bitcoin can be damaged. Unconditional love stopped when posts surfaced about the environmental impact of digital asset blockchain operations. In May 2021, the company removed Bitcoin from its payment method. Now, you don’t see (as much) Bitcoin in its equity.

Tesla is separating from Bitcoin

In comments to the second quarter report, Tesla announced: “At the end of the quarter, cash equivalents and short-term marketable securities consistently increased to $ 902 million. […] By the end of the second quarter, we had converted approximately 75% of our bitcoin purchases into fiat currency. Q2 conversions added $ 936 million in cash to our balance sheet.

The rest of the report allows us to know that the company was able to exceed analysts ’expectations and achieved revenue of 2.26 billion dollars. So why choose to share your bitcoins? In the context of a bear marketthe assumption paves the way for a real cleanup of the crypto sector and the price corrections are brutal.

Even if a strong momentum benefits Bitcoin within a week, many analysts expect bearish outlook. The $ 24,000 threshold is very weak and many see Bitcoin in supports below $ 20,000, enough to leave Tesla’s Bitcoin investment in the red for a long time. And for a company the stock market has been affected by many shortages and inflation due to oil threatening consumptionit’s hard not to want to protect yourself.

The evolution of the Bitcoin price in 5 years. Tesla only kept all of its bitcoins for a year and a half © Google

To see the market response, the fact that Tesla had already completed its operations earlier – by the end of June – reassured investors not to rush to sell their cryptos instead. But the price of Bitcoin is still experiencing a bit of volatility. In addition, Tesla has not yet completely disappeared from cryptocurrency, even though its exposure now costs about $ 218 million.

With the crypto winter, the fall in the price of Bitcoin between November 2021 and now (-66%) has not saved Tesla’s equity, which has therefore lost more than 300 million dollars in its operations. It’s been two months since the value of its equity in Bitcoin fell below the first purchase. The average price of a BTC during operation is $ 31,620.

The operation appears to be a failure as long as within a year the manufacturer is the beneficiary of its operation. At its peak, that means in November 2021, the brand’s equity exceeded 3 billion dollars. Tesla never confirmed this, but we already read in the annual balance sheet that its market value of Bitcoin’s equity reached $ 1.99 billion by the end of December 2021. By that time, the price of the cryptocurrency had already fallen by 30%. .

Leave a Comment