Thursday, May 20, 2021
One man, two tweets
Musk parachutes in a crash for Bitcoin
By Diana Dittmer
First Elon Musk brings the Bitcoin price to collapse, then he stops the slide again. A single tweet is enough for both. This time it consists of two words and two emojis: a diamond and two hands. Crypto fans know what that means. What happened?
Elon Musk pulls the ripcord: After the Bitcoin rate on the cryptocurrency market temporarily slumped by a good 30 percent yesterday, the Tesla boss reports by tweet and abruptly stops the plunge of the still most important cyber currency. In the middle of the crash, two words and two emojis are sufficient for the command “full drive back”: “Tesla has” (translated: Tesla has) as well as a diamond and hands.
Bitcoin was recently in a massive downward spiral. In the past few weeks, the rate has halved to just under 30,000 US dollars. The currency plunged to the $ 30,066 mark yesterday, its lowest level since late January. The record high was more than twice as high in mid-April, at just under $ 65,000. Analyst Timo Emden from Emden Research spoke of panic sales in the meantime. “Obviously nobody wants to grab the falling knife right now.” Other digital currencies such as ether, the number two after Bitcoin, and Dogecoin were also torn into the depths. Ether fell up to 40 percent to just under $ 2,000.
Accordingly, there was a sigh of relief on the crypto market when the recovery began. Because in plain language Musk’s message means: “Tesla has diamond hands”, writes the portal t3n. In stock exchange slang, “Diamond Hands” denotes someone who will hold on to his investment until the bitter end, according to the translation. The counterpart to this is an investor with “paper hands” who rejects his investments at the first sign of a downward trend.
Almost magically, Musk’s tweet worked like a parachute in free fall and the Bitcoin crash came to a halt: Apparently, after days of guesswork, the crypto market has now come to the conclusion that Tesla will not sell its enormous Bitcoin holdings but will hold onto them.
This is exactly what the crypto scene had recently doubted. The Tesla boss, who is actually a big crypto fan, can only blame himself for this. Because he himself recently caused a lot of confusion and thus fueled sales speculation. Just a week ago he surprisingly announced via tweet that payments for Teslas with Bitcoin had been stopped. The reason he gave the miserable environmental balance in the production of bitcoins. “We are concerned about the surge in the use of fossil fuels for mining and transactions in Bitcoin,” he said. Above all, the consumption of coal energy is questionable. Although he still believes in the future of cryptocurrencies, the development should not happen at the expense of the environment, said Musk.
Puzzles over Tesla’s Bitcoin holdings
The open question investors had to ask themselves was: Would that be why Musk would sell Tesla’s huge Bitcoin holdings? Instead of providing clarity, he followed up on Sunday with a tweet that left users with even bigger question marks. On the comment by @cryptowhale: “Bitcoin supporters will slap themselves in the next quarter if they find out that Tesla has sold the rest of its Bitcoin holdings. With all the hatred that Elon Musk has, I wouldn’t accuse (…) “, replied Musk:” Indeed “. This was interpreted by the users as a sales signal. Whether it was meant that way is open.
But the fact is: The price decline on the crypto market then accelerated. When China then also banned companies that offer trading in cryptocurrencies – which Musk could not have foreseen – this was in a way too much. The declaration by Chinese banking associations that cryptocurrencies are “not real currencies” fueled fears of greater regulation in this market, which is important for digital currencies, and Bitcoin, Ripple and Ethereum only knew one direction: steeply downwards.
The stock market got into the downward spiral. All companies known to hold large positions in cryptos fell feathers. In February, Tesla announced the purchase of Bitcoin worth 1.5 billion US dollars, which had pushed the Bitcoin price up sharply, which ultimately meant that the height of the fall was correspondingly high. In parallel with the Bitcoin crash, Tesla shares also went into a tailspin. In the end, it closed 2.5 percent easier. For Musk, the trail of blood on the crypto market was definitely reason enough to speak clearly in his – albeit cryptic – message.
At least for the time being, he seems to have calmed the situation down. Nevertheless, he also pays a high price for his hacking: The market value of the Bitcoin holdings of his e-car pioneer has been roughly halved to 1.26 billion dollars as a result of the crash. This total arises under the assumption that the value recorded at the end of the quarter of roughly $ 2.5 billion has fallen by 49 percent as in the market. This means that the value would at least be close to the purchase price. Little consolation. Because the value of the bitcoins has a significant value for the Tesla balance sheet. Without Musk’s crypto bet and the huge increase in value at Bitcoin, he would have had to report a loss for Tesla in the first quarter. And not everyone is convinced that it will stay that way. “The cat and mouse game Elon Musks still leaves a bland aftertaste,” says analyst Timo Emden.
.