Musk Draws Shock and Sympathy on Reddit After Tesla Sold Bitcoins

What are Elon Musk’s intentions? That’s the question agitating young traders after Tesla sold 75% of its bitcoin.

It’s an understatement to say that Tesla’s  (TSLA) – Get Tesla Inc. Report July 20 announcement that the company had sold off most of its bitcoin caused a shock in the crypto industry. 

The Austin manufacturer of premium electric vehicles and its charismatic chief executive, Elon Musk, gave cryptocurrencies, and in particular bitcoin, true credibility on Feb. 1, 2021. That’s when they invested $1.5 billion in the king of digital currencies. 

How then to interpret the sale of all these bitcoins, especially when Tesla now holds only a tiny bit of bitcoin, valued at $218 million?

On the Reddit social network, land of many Gen Z and millennial traders, the news came as a thunderclap. Musk has a legion of fans there, and cryptocurrencies are one of the favorite asset classes, along with the meme stocks like GameStop  (GME) – Get GameStop Corporation Report and AMC Entertainment  (AMC) – Get AMC Entertainment Holdings Inc. Class A Report).

‘One of Us’

“Elon better delete that tweet he made last year about Tesla having ‘diamonds hands’,” one user posted.

What this user is saying is that if Tesla had a nose for good investments, the EV maker never would have invested in an asset whose value has plunged more than 67% from its high. That was $69,044.77, reached on Nov, 10, according to data firm CoinGecko

Bitcoin is currently trading around $22,612. Last month the cryptocurrency fell to around $18,000 due to uncertainties in the economy and a liquidity crisis affecting crypto lenders like Voyager Digital, Celsius Network, BlockFi, Babel Finance and others.

“Elon said he wanted to prove a point (that bitcoin is a liquid asset),” another user commented.

“It’s almost as if the echo chamber of crypto bros are a self-fulfilling prophecy,” added another Reddit user.

“He lost interest I’m guessing,” said one user. “Probably too busy thinking about tunnels on Mars or something equally ridiculous.”

Tesla is the world’s sixth most valuable company and is led by the richest and one of the most innovative people in the world. The thought that the company had perhaps also broken its teeth on bitcoin seemed to bring comfort to some young traders who lost their savings in the cryptocurrency-market crash. The market has lost $2 trillion since November.

“Now I can say I’m trading crypto just like the richest man on planet. Buy high sell low. I’m a little bit of a genius myself thank you,” wrote one user.

“He’s one of us!!!” another one agreed, referring to Musk.

“Buy high sell low,” one user said.

“One of us! One of us! One of us!,” another user repeated.

Will Tesla Buy Back Bitcoin?

“Elon is a confirmed shitposter. I can see him FOMOing and buying high/selling low like the pros do here,” a user said. The writer used the slang word FOMO, which stands for “fear of missing out,” that nagging feeling you have when you’re convinced that others are having better experiences than you.

These various posts clearly show the dynamics that prevailed on the cryptocurrency market in the second half of 2021. Many retail investors, attracted by the crypto craze, bought coins while prices were soaring and found themselves liquidating them this year and losing big as prices collapsed.

At the beginning of the second quarter, Tesla still held about 42,000 bitcoins in its balance sheet at a value of $1.26 billion, according to a Securities and Exchange Commission filing. 

If the group therefore sold 75% and collected $936 million as it said on July 20, the company appears to have lost $106 million overall, because it said it still has bitcoin valued at $218 million.

“Let’s wait and see if they rebuy after the Fed meeting,” one Reddit user commented.

“Maybe they’ll go for something different this time,” another user posted.

“It should be mentioned that the reason we sold a bunch of our current [bitcoin] holdings was that we were uncertain as to when the covid lockdowns in China would alleviate,” Musk told analysts in the second quarter earnings’ call. 

“So it was important for us to maximize our cash position given the uncertainty of the covid lockdown in China.

“We are certainly open to increasing coin holdings in future, so this should not be taken as some verdict on bitcoin,” the billionaire added.

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