Tesla dumped a large portion of its bitcoin holdings. Should you?
“The reason we sold a bunch of our bitcoin holdings was because we were uncertain when the Covid lockdowns in China would ease,” Musk said on an earnings call with analysts Wednesday evening. “So it was important for us to maximize our cash position.”
But is the change in Tesla’s bitcoin stance really a reason to dump crypto – or just a convenient excuse after a nice little rally?
Bitcoin prices, which have more than halved this year, have enjoyed a solid rebound over the past week, rising 12% over the past seven days. Other cryptos, such as ethereum and solana, have increased even more dramatically. Also, Musk made it clear that Tesla is not abandoning crypto.
“The Tesla sale could trigger a new wave of related dumping by corporate bitcoin holders, most of whom may also be troubled by the ongoing global economic slowdown,” Andrey Diyakonov, chief commercial officer at Choise.com, a crypto wallet firm, said in an e -mail to CNN Business. “While this is speculation, investors are likely to begin to take note of this opportunity going forward, a move that is bound to reflect in long-term performance.”
“Traders should not be surprised that Musk supported Tesla’s sale of bitcoin, as the crypto winter was clearly in place and the balance sheet needed to be strengthened,” Edward Moya, senior market analyst for the Americas at OANDA, a forex trading firm. , said in a report.
“Tesla’s dumping of a good portion of their bitcoin holding news caught many off guard and helped end the rally,” Moya added. “This is not a game changer for bitcoin, but it unsettled a good portion of the avid social media followers.”
“Macro factors play a bigger role in bitcoin’s price, such as Fed decisions on interest rate hikes and inflation,” Chris Kline, co-founder of Bitcoin IRA, a digital asset technology platform, said in an email to CNN Business.
“Major institutions moving into the arena are affecting the price action of bitcoin, which is why this current crypto winter is different from previous ones,” Kline added. “Major institutions have adopted crypto in one form or another, and that plays a factor in the volatility we’ve seen recently.”
