June 19, 2021

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Bitcoin Bounces Back From Three Month Low As Elon Musk Denies Tesla Has Sold Its Crypto Assets

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Topline

Bitcoin started to bounce back from a three month low Monday morning after Tesla CEO Elon Musk denied the company had sold its sizable bitcoin assets, marking the latest swing in volatile crypto markets since the billionaire precipitated a $300 billion crash by announcing Tesla would no longer accept bitcoin as payment due to its weighty environmental footprint. 

Key Facts

Bitcoin prices rallied Monday morning after Musk clarified that “Tesla has not sold any Bitcoin.”

The crypto’s value surged by about 7% in the 20 minutes following Musk’s tweet to around $45,700 a token. 

A hint from Musk that Tesla may sell its $1.5 billion bitcoin holding Sunday sent prices plummeting to around $42,000 a coin, the lowest since February.

Bitcoin remains the most valuable cryptocurrency by a long margin—its market cap, around $850 billion, is still over double that of its closest rival Ethereum and more than ten times its third closest, Binance Coin.

But the crypto market is still reeling from a $300 billion crash precipitated when Musk said Tesla said it would no longer accept bitcoin as payment.   

Key Background

Cryptocurrencies are a notoriously volatile asset class and, increasingly, subject to the whims and fancies of Musk, whose social media activity alone can shift or create value at breakneck speed. Much of the big bitcoin movements this year can be traced to Musk, with the token surging to a new all time high in March after he revealed the cryptocurrency could be used to purchase Tesla vehicles, a hotly anticipated move first teased when Tesla revealed it had invested $1.5 billion in the controversial asset and what many saw as a signal of confidence that could bring bitcoin closer to mainstream use. Now, many major institutions are embracing cryptocurrencies after years of hesitation, if only to satisfy growing client demand. Tesla’s decision to stop accepting bitcoin, for environmental reasons, knocked around $300 billion off the crypto market, though created appetite for environmentally friendly cryptos like Cardano’s ada, which temporarily soared to become the fourth most valuable cryptocurrency. 

Tangent

Dogecoin is another cryptocurrency Musk frequently influences, helping take it from something created as a joke to one of the most valuable cryptocurrencies around. Its value surged to all time highs earlier this month in anticipation of Musk’s SNL performance, but it plummeted 40% after he called it a “hustle.” Its value dropped further in the $300 billion sell off, though rallied when Musk hinted Tesla may accept doge in payment and said he was working with the engineers to produce a more efficient system. At the time of writing, dogecoin is the sixth most valuable cryptocurrency.   

Crucial Quote

Musk has repeatedly warned people to “invest with caution,” describing crypto assets as speculative. 

Further Reading

Elon Musk Sends Bitcoin Tumbling With A One-Word Tweet (Forbes)

Tesla Will Stop Accepting Bitcoin As Payment Due To Environmental Worries, Musk Says (Forbes)

Dogecoin Stages A Comeback Amid Crypto’s $300 Billion Crash, Soaring 30% As Elon Musk And Coinbase Signal Confidence (Forbes)

Elon Musk Warns People To ‘Invest With Caution’ As Dogecoin Rallies Ahead Of His SNL Appearance (Forbes)

Cardano Surges During $300 Billion Crypto Crash As Musk Eyes Sustainable Bitcoin Alternatives (Forbes)

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