TESLA sells Bitcoin. How dare they ?!?!

29 апр. 2021 г.

Crypto Twitter is going on a rant against Elon Musk and Tesla for selling their :bitcoin:
Maxis and HODLers take it out on Elon Musk for being a traitor, an opportunist, a shill, pump&dumper and more ... But what exactly happened?

In the Tesla earnings call this week, it became clear that Tesla has sold 10% of their bitcoin holdings. According to Elon Musk it was to test (and prove the liquidity), rather than profit taking.
► twitter.com/elonmusk/status/1386821144037236737
"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."

I don't want to jump to conclusions like many on Twitter do, but I think his explanation is very plausible. Elon Musk/Tesla want to check whether they can easily sell their BTC and go back to cash whenever needed. It's the same as you testing the withdrawal process from an exchange for a small amount to verify the process.

It's not unthinkable that now that they saw that this is done very easily and swiftly, Tesla will put more than the 7-8% of their cash reserves in Bitcoin as they have now proven that reverting it to cash is just a matter of taking the decision. Tesla's CFO has also confirmed that they will continue to invest in BTC.

My opinion is further confirmed by a paragraph in an article on MarketWatch saying :
"Musk and Tesla Chief Financial Officer Zach Kirkhorn discussed the first-quarter gambit as a sound decision, with the sale presented as a way to prove to investors that the market for the crypto asset is liquid at the scale Tesla is playing."

💡 This event, imho, shows other companies who had questions around the potential lack of liquidity in the crypto market that it is safe to put (part of) your cash reserves in Bitcoin and thus might incentivize more of them to do so.

However, this also comes with its drawdowns. Companies will most likely rebalance on a quarterly basis, if BTC rallies, they might sell off a portion of it for risk mitigation, to keep the percentage of BTC in their cash reserves at a level they are comfortable with. Not every company will be like MicroStrategy, and cash reserves are exactly what the word says, a reserve that will be used when needed, whether they are in cash or in BTC. So apart from quarterly fluctuations, we might see companies that sell off their entire stack of BTC to fund their new plans.

While the inflow of their funds benefits BTC hodlers, we can't take the benefits without seeing and accepting the potential "negative" aspects.

❔ What is your idea on Tesla selling 10% of their BTC holdings? I would love to read your opinions in the comments below.

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