Crypto market wrap: No worries about bitcoin, say industry leaders
Updated
Investors should have no worries about Tesla’s massive sell-off of its bitcoin holdings, say cryptocurrency industry leaders.
Bitcoin was down about 3% on Thursday as conventional markets closed in North America.
It still appeared to feel the effects of Tesla’s sell-off of 75% of its bitcoin holdings. But the world’s most valuable digital asset held above $23,000.
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No worries
Right after Tesla’s sell-off was reported on Wednesday, bitcoin’s value sank, briefly falling into the $22,000 range.
But Mikkel Morch, executive-director at crypto hedge fund operator Ark36, suggested that investors do not need to fret about about bitcoin’s prospects.
If Tesla had sold its bitcoin in the second quarter of 2021, the impact of Tesla founder and CEO Elon Musk’s decision would have been far greater, said Mikkel Morch, executive-director at crypto hedge fund operator Ark36.
BTC now a 'macro asset'
“Bitcoin is now a global macro asset and, as such, is driven by forces much greater than Musk,” said Morch.
Morch called the quick decline a “knee-jerk reaction,” but noted that a “healthy pullback” was expected after seven straight days of gains.
“From a purely technical perspective, the positive momentum can still be conserved if the price rebounds from the current levels within the next couple of days,” he said.
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Times have changed
Morch said times have changed since Tesla purchased $1.5bn of bitcoin in February 2021, boosting its price to a then-record $43,000. The move was interpreted as an endorsement of bitcoin’s importance as an institutional-grade investment.
However, he added, bitcoin’s place in the investment space has been solidified and the importance of what Musk and Tesla think about the coin has “all but diminished.”
Andrey Diyakonov, chief commercial officer at Choise, the company behind the crypterium (CRPT) coin, noted that the news of Tesla’s sell-off caused bitcoin to fall from $23,759.
BTC: one month high
That was bitcoin’s highest point in a month, after the sector grappled with the Celsius Network, Voyager Digital and Three Arrows Capital bankruptcies and other severe disruptions.
Regardless of what investors consider to be the cause of the increase, “high-spirits sentiment is sweeping across the digital currency ecosystem,” he contended
Sustained growth in bitcoin’s price could signal that the crypto sector is recovering and investors need to get on the train before prices skyrocket again, he added.
But he noted that global economic headwinds may cause investors to become even more conservative.
Recoveries around corner?
Diana Biggs, chief strategy officer, Valour (Courtesy of Diana Biggs)“These events highlight that surprising recoveries might be right around the corner in the industry, but so are slumps and hiccups on the way forward,” he said.
Chris Terry, vice-president of enterprise solutions for US-based open crypto-lending platform operator SmartFi, said having bitcoin on a balance sheet means the coin is considered a reserve asset – just like a US Treasury bill or other short-term investment.
Terry contended that Musk did what a good manager does when facing rough times: He raised cash.
While some people view Musk’s move as a sign that he dislikes bitcoin, “that is not the case at all.”
“In fact, it is the opposite,” said Terry. “It proves the utility of bitcoin as a mature financial asset.”
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Mow: Tesla had to sell
Swan Bitcoin co-founder Brady Swenson said on Twitter that Tesla’s move was bullish for a lot of reasons.
"But a huge one is that it proves bitcoin is liquid enough to be responsibly held by the world’s largest companies,” said Swenson, whose firm provides custodial wallet and investment advisory services.
Bitcoin nation-state adoption advocate Samson Mow said Tesla had no choice but to sell; otherwise, the company would have ended up in the red in the second quarter.
“Almost everyone that sold this dip had no choice but to sell, and none of the reasons had anything to do with bitcoin fundamental,” he wrote on Twitter.
Diana Biggs, chief strategy officer at Valour, told Capital.com on Wednesday that the crypto market’s recent troubles have given investors more clarity.
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