Bitcoin has lost some of its gains as news about Tesla’s earnings report is published. Elon Musk’s company disclosed that 75% of its BTC holdings were sold at a loss of 9% over Q2, 2022.
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The following is an extract from the reportsThe company converted all its Bitcoin assets into fiat currency. Bitcoin fell short of the $24,000 mark and trades now at $23,100, with a 2.2% drop in the hour.
The cryptocurrency saw a gain of 20% over the week, and the market remains optimistic about the future. Jeff Dorman is the CIO of investment firm Arca commentedThe following information is about recent developments that could have an impact on Bitcoin.
If you’ve ever wondered whether or not trading bots control digital asset trading…keep in mind the entire digital asset market just fell on news that one company (Tesla) sold one asset (BTC) 1-3 months ago. This move will be retraced quickly.
Tesla shares posted a 4% profit right after publishing its earnings reports and is near its highest level since June. Ludwig Wittgenstein claims the car manufacturer’s decision to liquidate a large portion of its BTC holding could have long-lasting consequences for the crypto market.
Earnings increase by Tesla +4 %
¯_(ツ)_/¯ pic.twitter.com/coOFjpsOqy
— TradingView (@tradingview) July 20, 2022
Elon Musk’s company bought Bitcoin in 2021. At that time, BTC’s price was losing steam as it traded around its current levels, but when Tesla announced its decision, the cryptocurrency was able to rally into uncharted territory.
BTC was bought by the company to help it hedge against inflation as well as to boost its cashflow. It is therefore important to fully understand why BTC was sold.
Wittgenstein says there could be three scenarios. The company needs to raise money, climate concerns over BTC’s alleged energy consumption or total faith loss in cryptocurrency. The first scenario, which is more bullish than the second, is considered the best.
Tesla sold its Bitcoins.
NorthmanTrader founder Sven Henrich says that Tesla adopted a corporate strategy after the Bitcoin price dropped to $20,000. To maintain cash flow, the company had to sell a part of its assets. Henrich said:
In trading terms: $TSLA got itself margin called and liquidated a large chunk of its digital asset portfolio to make itself free cash flow positive & improve its balance sheet.
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So far, Wittgenstein’s first scenario seems to be in play. If the crypto market can stay in its current course, despite Tesla’s news, BTC’s price could reclaim the important area above $27,000.