The bitcoin price, after doubling through the first three months of the year, has struggled in April—losing over 10% of its value amid multiple warnings the “frothy” cryptocurrency market could be headed for a “major” correction.
With Tesla set to release its first set of results since adding $1.5 billion worth of bitcoin to its balance sheet (and promising to increase its holdings) on Monday, Musk has primed the bitcoin and cryptocurrency market for fireworks.
Bitcoin and cryptocurrency market watchers, highly attuned to Musk’s signals, will be paying close attention to any bitcoin or crypto-related statements in Tesla’s first-quarter earnings report, set to be released after the market close on Monday evening.
Musk has made a series of cryptic bitcoin and crypto-related Twitter posts in recent weeks, something he also did before Tesla announced its huge bitcoin-buy in early February. Musk has also regularly posted about the tongue-in-cheek meme-based cryptocurrency dogecoin, spurring it on to a mind-blowing $50 billion market cap—though he’s previously said his dogecoin posts shouldn’t be taken seriously.
The soaring bitcoin price led to reports Tesla could make more from its bitcoin bet than its core car business. Tesla is “on a trajectory to make more from its bitcoin investments than profits from selling its EV (electric vehicle) cars in all of 2020,” Wedbush Securities analyst Daniel Ives estimated in a late February note, putting Tesla’s unrealized profits at around $1 billion.
However, the bitcoin price has lost around $10,000 per bitcoin since then, a decline of almost 20% despite the likes of office giant WeWork announcing its support of bitcoin and many analysts predicting bitcoin will continue to climb.
Bitcoin rocketed to an all-time high of almost $65,000 per bitcoin in mid-April, soaring as major U.S. bitcoin and cryptocurrency exchange Coinbase made its hotly-anticipated market debut but falling back as the hype faded.
The bitcoin and wider cryptocurrency slide, which has wiped $500 billion from the near-$2 trillion market over the last two weeks, has largely failed to dampen the spirits of many in the crypto community.
“I always try not to give price predictions, but if we do manage to hold here, it could provide nice support for the market to go higher,” Hunter Merghart, head of U.S. for the Luxembourg-based Bitstamp crypto exchange, said in emailed comments, adding the decline “could be viewed as bearish, especially after an event like the Coinbase direct listing where market sentiment and positioning seemed to be bullish.”
“We’re only down around 14% from all-time highs. Overall given the history of bitcoin volatility, I don’t think there’s too much to read into right now. This feels more like a potentially healthy pullback in the short term.”