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Crypto market wrap: Bitcoin surpasses $24,000 – for a while

By Monte Stewart


Updated

Photo of coin
Bitcoin surpassed $24,000 for a while on Wednesday.as investors let recent good times roll. - Photo: Shutterstock

Bitcoin surpassed $24,000 (£19,165) on Wednesday – for a while.

Investors let the good times roll on following positive gains on Tuesday and kept buying the world’s most valuable cryptocurrency.

But then Elon Musk’s Tesla revealed that it had sold 75% of its bitcoin (BTC) holdings and the coin’s value sank.

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BTC to USD

Altcoin prices also fall

Bitcoin’s decline sent altcoins down with it. Most altcoins were well in the red after being well in the green on Monday and Tuesday along with bitcoin.

According to CoinMarketData, polygon (MATIC), arweave (AR) and basic attention token (BAT) were among the hardest hit. However, they declined less than 10% and most other coins’ losses were relatively modest.

MATIC to USD

Tesla suffers ‘bitcoin impairment’

Tesla revealed in its second-quarter earnings report that it sold most of its bitcoin for $936m. The sell-off, described as a “bitcoin impairment,” hurt the electric-vehicle maker’s profitability during the period.

Tesla’s earnings report was released after stock markets closed.

The company revealed in US Securities and Exchange Commission (SEC) filing in February 2021 that it had purchased $1.5bn worth of bitcoin. (Tesla then sold 10% of that stake in April 2021.)

However, bitcoin is down almost 50% from the $43,000 then-record price achieved in February 2021 after Tesla’s purchase was revealed. So Tesla’s sale of 75% of its bitcoin holdings represents a significant loss on the company’s investment.

BTC/USD

64,813.85 Price
+0.050% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

ETH/USD

3,429.87 Price
-0.460% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

BCH/USD

379.10 Price
-2.370% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

XRP/USD

0.62 Price
+5.550% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

AR to USD

Not a verdict

But Musk said Wednesday on Tesla’s earnings conference call that the sell-off should not be regarded as “some verdict on bitcoin.” He said the coins were sold to maximize Tesla’s cash holdings due to uncertainty surrounding COVID-19 shutdowns.

Bitcoin and ethereum (ETH) managed to get back in the green during Wednesday night trading hours in North America, indicating that traders were buying the dip.

Once again, bitcoin appeared to disprove outspoken economic commentator Peter Schiff’s recent claim that the world’s top digital asset is dead.

Despite the hit caused by the news of Tesla’s sell-off, bitcoin had a relatively good day as it stayed above $23,000 for most of the day. Until Tuesday, that level had been elusive as the market dealt with the crypto winter brought on by a meltdown and the financial strife of lenders Celsius Network and Voyager Digital, and hedge fund operator Three Arrows Capital, which have filed for bankruptcy.

Investors have more clarity

Photo of womanDiana Biggs, Valour chief strategy officer (Courtesy of Diana Biggs)

 

Celsius coin in the green

Ironically, the Celsius Network coin (CEL), stayed in the green throughout the day.

The coin has experienced considerable volatility at times lately. Last week, CEL was down 58% at one point as its investors struggled to maintain their short squeeze, which is designed to foil large players looking to profit from short-term returns.

Markets in this article

BTC/USD
Bitcoin / USD
64813.85 USD
32.4 +0.050%
BAT/USD
Basic Attention Token / USD
0.20561 USD
0.00244 +1.240%
MATIC/USD
MATIC/USD
0.57495 USD
0.00982 +1.810%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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