Bitcoin was showing signs of recovery but the rebound was short-lived. After touching $39,000, Bitcoin slid to $36,000 in a few hours. The reason for this decline is the same as the latest price crash taking Bitcoin from $55,000 to $30,000 – Elon Musk.
On the morning of Jun 4, Musk wrote a cryptic tweet hinting at a breakup with Bitcoin. Following his tweet, Bitcoin’s gain for the past 5 days was erased.
Musk’s role in the cryptocurrency community is a controversial one. On one hand, he had supported various crypto and blockchain upgrades, promoted Tesla to accept Bitcoin payment and pumped Dogecoin with his tweets. On the other hand, his reversed attitude towards Bitcoin contributed to a 50% crash in Bitcoin’s price and crashes of altcoins to various degrees. Many people accused him of manipulating the market and his reputation among crypto enthusiasts hit a low after his repeated criticisms of Bitcoin.
Is Musk Going To Sell Bitcoin?
Although Musk’s tweet of a diamond hand suggests he will not sell Bitcoin, there may be a few reasons why he would.
With the price of Tesla stock dropping below 600, Musk is no longer the richest man in the world. At the same time, Bitcoin has shed over 30% from its ATH, approaching the estimated price of $34,700 at which Tesla bought Bitcoin. If Bitcoin continues to drop, it can’t help Tesla hedge the loss of its stock price and could become a burden on the balance sheet.
In addition, Tesla faces a steep May sales decline in China. China is the second-biggest market for Tesla after the United States. But in the past two months, Tesla faced public relations backlash following high-profile vehicle crashes and quality complaints. According to internal data, Tesla’s orders in China nearly halved in May, totaling 11,671, when the company sold about 35,478 cars in China.
Musk selling Bitcoin will certainly send a huge blow to Bitcoin’s narrative to become a mainstream currency. With the prospect of Bitcoin getting a rebound soon becomes precarious, Musk’s action could push the price of Bitcoin even further. On the bright side, Musk selling Bitcoin could be the other shoe that investors are waiting to drop and Bitcoin could be less affected by Elon Musk as it continues to grow.
Hedging Volatility With Futures Trading
In the short term, the market is expected to be highly volatile. With futures trading, traders can take advantage of price swings to earn more Bitcoin.
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