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