Elon Musk’s Tesla faces $440 million loss on its BTC holdings while whales continue to dump


  • Bitcoin price plummets below $20,000 yet again, pushing automotive manufacturer Tesla towards a $440 million writedown on BTC holdings. 
  • Tesla accumulated $1.5 billion in Bitcoin in 2021, however the car manufacturer’s bet turned into a loss during the crypto bloodbath. 
  • Whales are depositing Bitcoin to exchanges rapidly, fueling an increase in selling pressure. 

The electric car manufacturer faces a dire fate as its Bitcoin holdings further devalue amidst a market rout that is seeing whales readying to sell by rapidly pouring their Bitcoin onto crypto exchange platforms. Tesla is already facing a $440 million writedown of its Bitcoin holdings after the recent crypto market bloodbath, and could face even more. 

Tesla prepares to record impairment on Bitcoin holdings

Bitcoin price has slipped below $20,000, hitting an 18-month low. This is bad news for Tesla which bought $1.5 billion of Bitcoin in 2021. The move has garnered a backlash from investors as the company is heading towards a writedown. Part of Tesla’s cash reserves were moved into cryptocurrency, however, the decision backfired as Bitcoin price crashed in the recent crypto bloodbath. 

Tesla recorded the value of its Bitcoin holdings at $1.26 billion three months ago. The actual market value of Tesla’s holdings at the time was close to $2 billion, however, it could not register these gains on its investments, as they were unrealized (they had not yet been sold), in line with accounting practices. 

With the recent slump in Bitcoin price (to the $19,000 level), on the final day of Tesla’s second financial quarter, however, the company’s holdings are now worth an estimated $820.8 million. Elon Musk’s Tesla is therefore likely to record an impairment on its Bitcoin holdings of around $440 million, 9% of the car company's annual profit in 2021. 

When Tesla reports its quarterly results in July 2022, it is likely to make this announcement and take a writedown of $440 million on its big Bitcoin bet. 

Bitcoin addresses underwater surpassed March 2020 record

Based on data from crypto on-chain firm Glassnode, the weekly moving average number of unique Bitcoin addresses at a loss hit a peak of 18.8 million on July 3, 2022. Data revealed that the average Bitcoin holder was hit by the worst monthly loss since 2011 in the current bloodbath. 

Bitcoin: Number of Addresses in Loss

Bitcoin: Number of Addresses in Loss

Analysts at CryptoQuant reveal that the Whale Ratio metric, an indicator that reveals the selling behavior of large wallet investors, points towards a Bitcoin price bottom soon. Whale Ratio metric is calculated by dividing bitcoin’s top 10 inflows to exchanges by all the inflows in a single day. High values of the metric indicate price fluctuations. 

The analyst noted that whales are rapidly depositing their Bitcoin holdings to cryptocurrency exchanges and realizing massive losses. Bitcoin price is therefore likely to find a bottom soon and for the next bullish cycle to then begin. 

Analysts predict Bitcoin price could bleed further

Analysts at FXStreet evaluated the Bitcoin price chart and revealed that the asset wants to plummet below $18,817, its seven-day low. For more information and key price points to watch out for, check this video:

 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

US presidential election outcome could shape the future of crypto

US presidential election outcome could shape the future of crypto

US citizens will go to the polls to elect a new president on November 5, and their choice could be key for the future of the crypto industry and thus the price outlook for Bitcoin (BTC).

More Cryptocurrencies News
Bitcoin Price Forecast: BTC recovers as Donald Trump takes lead on polls

Bitcoin Price Forecast: BTC recovers as Donald Trump takes lead on polls

Bitcoin (BTC) slightly recovered to around $68,800 on Tuesday, following a shift in the United States presidential race that saw former President Donald Trump regain the lead, after US spot Bitcoin ETFs experienced an outflow of over $540 million on Monday.

More Bitcoin News
Crypto markets brace for volatility in tight race between Trump and Harris

Crypto markets brace for volatility in tight race between Trump and Harris

The US presidential election is one of the most significant events in the world. Due to the influence of the country’s political decisions, policies, and economic approaches, it can significantly impact crypto and global markets. 

More Cryptocurrencies News
Trump-inspired memecoin MAGA shows bullish on-chain metrics ahead of US elections

Trump-inspired memecoin MAGA shows bullish on-chain metrics ahead of US elections

MAGA (TRUMP) trades slightly down to around $3.4 on Tuesday after rallying more than 20% since Sunday. The former President Donald Trump-based memecoin is poised for further gains as daily active addresses and network growth metrics rise, signaling increased network usage and adoption

More Cryptocurrencies News
Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP