On Wednesday night (May 19, Vietnam time), Elon Musk tweeted that “Tesla has Diamond Hands”. This hinted that the electric car company won’t be selling its $1.5 billion worth of Bitcoin, but plans to keep holding it for the long term, according to CNBC.
Notably, Musk’s tweet came right as Bitcoin was plunging hard on the evening of May 19. At one point, Bitcoin’s price dropped to around $30,000. However, seemingly boosted by Musk’s reassuring statement, Bitcoin quickly bounced back to about $40,000 by midnight on May 20, according to Binance data.
It’s worth noting that Bitcoin’s crash wiped out nearly all of Tesla’s profits since entering the crypto market (assuming Tesla hasn’t sold any Bitcoin). Back in February 2021, Tesla spent $1.5 billion to buy 43,000 BTC at an average price of about $34,800. Just a few months later, Tesla’s gains nearly doubled when Bitcoin hit its peak at $64,000.
However, Bitcoin’s sharp drop in a short time quickly erased those profits. If Bitcoin falls below $30,000, Tesla could be stuck holding at a loss. Many crypto investors on Twitter believe Musk’s latest tweet was aimed at helping Bitcoin reverse course, indirectly protecting Tesla’s investment from losses.
Earlier on May 12, Elon Musk announced Tesla had suspended vehicle purchases using Bitcoin due to environmental concerns over crypto mining. Following that announcement, the crypto market lost $300 billion in value the same day. Over the weekend, Musk hinted on Twitter that Tesla might sell its Bitcoin, which pushed prices even lower. Although Musk later clarified that Tesla had no plans to sell, the crypto market continued to slide.
The most recent Bitcoin drop on the morning of May 19 came after China’s central bank, the People’s Bank of China (PBOC), reaffirmed its stance against any form of cryptocurrency payment. This negative news dealt a heavy blow to Bitcoin, triggering panic selling among investors.
Source: CNBC
