Market Manipulations, Or Why Did Tesla Sell 10% Of Their Bitcoins?

Elon Musk’s Response

The news was met with some panic, pages-long social media threads, and comments with all levels of toxicity. I think it can be best summarized by a dialogue on Twitter between Dave Portnoy and Elon Musk:

@stoolpresidente: So am I understanding this correctly? @elonmusk buys #bitcoin. Then he pumps it. It goes up. Then he dumps it and makes a fortune […].

@elonmusk: No, you do not. I have not sold any of my Bitcoin. Tesla sold 10% of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.

Stress Testing Liquidity is Important

Honestly, I don’t see what the fuss is about. Tesla was one of the very first companies to bet their money on Bitcoin. And when you invest $1.5 billion in a new, almost dark-horse asset, it’s only natural to wonder: how viable it is as a store of value? What about its market depth? How much liquidity does it have?

So yes, it turns out it was a stress test, and Musk himself confirmed he is happy with the result. According to Zachary Kirkhorn, Tesla’s CFO, Tesla officials “have been quite pleased with how much liquidity there is in the Bitcoin market.”

Indeed, since the 26th of April, when the news of the sale first hit the headlines, the coin’s price never fell below $50.000 (until the crash). After peaking at around 59500 a few times, at the time of this writing, it trades at $56,879.42. Well done, Bitcoin. Well done, Tesla.

How do you feel about Tesla making more money from their Bitcoin investments in 2021 than during the whole of 2020?

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