How bitcoin crash protected BTC investors from Elon Musk’s Tesla

The crash experienced by Bitcoin (BTC) seems to have encouraged Elon Musk’s Tesla to hold its BTCs, as the company didn’t sell the crypto-asset in its possession.

Tesla entered the cryptocurrency market after buying $1.5 billion worth of bitcoin according to its announcement in February 2021.

It was disclosed that the average price of the Bitcoin bought by Tesla was estimated at $32,000 each according to Barrons.

In the first quarter of 2021, it sold 10 per cent of its BTC holdings for $272 million, before offloading 75 per cent in the second quarter of last year for $936 million at an average price of $32,209, based on estimate by Arcane Research analyst, Vetle Lunde.

The sell off by Tesla had impacted the confidence of cryptocurrency holders, most especially when it announced it would no longer accept Bitcoin as a form of payment for Tesla vehicles in May 2021, two months after making it a payment option in February.

Read also:New report predicts Bitcoin to hit $188,451, set timeframe for new all-time high

Although Tesla’s sell off opened the door for crypto holders to exit the market in droves, it wasn’t enough to stop BTC from hitting an all-time high of over $68,000 in November 2021.

However, since it reached its peak, Bitcoin has been on a decline, raising fears amongst investors who began to reduce their exposure to the volatility of the crypto market and seek more definite returns in fixed-income markets.

Fear that Tesla might continue its sell off to totally exit the crypto market due to Musk’s criticism of the volume of energy Bitcoin consume also contributed to the exits.

Ripples Nigeria understands that with Bitcoin trading below $20,000 for most of the second half of last year, and hovering around $16,500 in November 2022, Tesla held its BTC, as another sell-off could attract losses when pegged to the average price it bought the crypto-asset in early 2021.

In its fourth quarter 2022 financial statements obtained on Thursday, it was learnt that Tesla didn’t sell any of its 9,720 BTC since its last sale in the second quarter of last year.

As at the time of filing this report, Bitcoin traded at $22,949.49, which puts the value of the total holding of Tesla at $223.06 million.

This means Tesla suffered an impairment of $87.97 million on the BTC assets in its vault when compared to the average price the firm reportedly bought them.

With Bitcoin already enjoying price recovery of 37.8 per cent year-to-date, a report of Tesla sell off in the fourth quarter could have wiped the gains this year and sent it back into the bears territory in the first quarter of 2023.

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