Watching Elon Musk’s actions in relation to Bitcoin is like looking at the world from a swing. Not so long ago, he launched a series of purchases with one tweet. That’s when he announced that he was going to use them to buy Tesla electric cars. But two months later he changed his mind, saying that the extraction of currency is too unecological. Then one tweet was enough for the value of Bitcoin to plummet. Now Musk is abandoning this currency even more thoroughly – Tesla has sold three-quarters of all the Bitcoins it owned. But it may not be an attempt to improve its financial results, analysts say. Maybe he’s just waiting for a better opportunity.
At one time, Tesla was the second largest Bitcoin holder in the category of publicly traded companies. Now the company has sold $ 935 million worth of virtual coins, she said, publishing financial results for the second quarter of this year. Why did it resort to this?
According to Musk’s official statement, this is done so that the company has as much cash as possible, given the uncertainty with production due to the closure of factories in China, where the company’s important plant is located. Actually, it just needed to demonstrate on its ledgers that it had more real money. The sale of Bitcoin helped the company maintain positive free cash flow, which is an important indicator for Tesla shareholders.
But, according to some observers, these figures do not converge, and Tesla would not have closed the quarter with negative cash flow. It generated $2.35 billion in cash, and after deducting expenses, we get $621 million, which is free cash flow. Thus, the sale of Bitcoin had no effect on the cash flow.
What prompted Tesla to sell BTC?
There are several versions of why the sale occurred. Perhaps Tesla has set an automatic stop loss. When the value of Bitcoin was falling, the systems could sell Bitcoin. Elon Musk, meanwhile, repeatedly foresaw economic problems and prepared for them by conducting layoffs and other measures.
And it could be the other way around. According to some experts, which is confirmed by other sources in the community, the prevailing opinion in Tesla is that Bitcoin has not yet found its bottom, and the company will try to buy at lower price levels in the future.
There are even opinions that this has already happened. If so, the information about this will appear only in the Tesla earnings report for the third quarter of this year. Interestingly, the volume of Doge (Dogecoin cryptocurrency) owned by Tesla has not changed. Blockchain data shows unusually large volumes of Bitcoin movement, both to exchanges such as Coinbase and between unidentified addresses, which indicates a decrease in the price of BTC in the short term.
Statements by Tesla CFO Zachary Kirkhorn indicate that the company received a profit of approximately $ 106 million from the transaction. Musk later added that the sale is not related to any negative position of Tesla in relation to cryptocurrencies. As noted, the company still holds dogecoin. It accepts it as a form of payment for promotional products.
Elon Musk has a complicated relationship with cryptocurrencies. His ads on purchases, sales and other statements, in the eyes of some experts, are market manipulations. But even so, investors have learned to accept his opinions with irony. However, you should not look for an attempt to manipulate the market behind the current sale of Bitcoin from Tesla.