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Elon Musk open to future Bitcoin Holdings despite recent sell off

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By Own Correspondent


The turbulence in the crypto market seems to be reaching higher levels. Less than a week ago, Tesla offloaded 75% of its Bitcoin assets, with the CEO of the giant company citing shutdowns in China as the trigger.

Just over a year ago, Tesla caused excitement in the digital currency world when it announced it had bought approximately $1.5bn of Bitcoin. The company also hinted at accepting the cryptocurrency as payment in the future. Well, the firm seems to have made a U-turn according to recent news.

Despite current cryptocurrency market conditions and Elon Musk’s move, traders around the world still see that Bitcoin is the best cryptocurrency to be traded. In South Africa, for example, Bitcoin is known as one of the best crypto South Africa.

Tesla Staggering Success

Elon Musk was born to South African and Canadian parents and spent most of his early life in South Africa. His entrepreneur mind is behind renowned global firms including PayPal and Space Exploration Technologies (SpaceX). The entrepreneur is also the biggest shareholder at Tesla with about 17%.

Tesla has enjoyed remarkable success in recent years, spurred by changing car customer expectations and a raft of regulations in the auto market. Today, Tesla is the most valuable car firm with an estimated worth of $846.45B as of 2022. Its dominance in the sale of battery-powered electric cars is mind-blowing – it accounts for 70% of the market in a field of other established car manufacturers.

The uniqueness of this company came evident during the COVID-19 crisis. While many companies struggled and others closed shop, Tesla has continued to thrive. In 2020 alone, the company delivered 499,550 cars.

After a series of successes, the company decided to jump into the cryptocurrency market by investing in Bitcoin.

Tesla Bitcoin Investment

In December 2020, the company announced that it had invested in Bitcoin worth $1.5 billion. Given the volatility of this nascent asset, there were mixed reactions with many analysts wondering about the reasons the carmaker would make such a risky move. Some saw the investment step as unnecessary, but there are a few reasons why Elon Musk and the company made the decision.

First, there was the aspect of diversification, an opportunity that the digital coin offers. It is normal for corporates to sometimes hold their excess money on their books for operational liquidity. Tesla itself acknowledged the risky part of such a strategy, given that cryptocurrencies can slump without warning.

Tesla may also have invested in Bitcoin to further push its brand, considering that Bitcoin is also a market disruptor. It aligns perfectly with Musk’s disruption agenda. Since Bitcoin is a decentralized asset, Tesla had a perfect platform to manage its brand without interference.

Bitcoin Sale, but Future Holdings on

That is why it was surprising for the crypto industry when the news that Tesla has sold off 75% of its Bitcoin investment came. In a press release a few days ago, the carmaker announced that by this conversion, their balance sheet had $936M more cash.

It is a big surprise to the industry because Musk has become one of the biggest boosters of Bitcoin’s success in recent years. What does the future hold for Tesla in Bitcoin?

Future Holdings for Musk

Tesla may have lost millions of its investment in Bitcoin, but they are not done with the cryptocurrency. In the words of Musk, the carmaker is “open to increasing Bitcoin Holdings in future.”

This is a positive amidst this news, considering the influence of Tesla and the capability of the CEO to cause ripples in the market with a single social media tweet.

Conclusion

Again, the volatility of the crypto market has been demonstrated by the events involving Elon Musk’s Tesla. While the market has soared on the claim of being independent of government influence, politics and inflation are evident factors in the movements within the market. Eyes are now on Tesla’s next move and whether Bitcoin can hold off the effects of this selloff.