Positive sentiment in the cryptocurrency market has abruptly weakened amid news that Tesla has sold 75% of Bitcoin's reserves, worth nearly $936 million. The major cryptocurrency has settled below $23,000, Ethereum falls below $1,500:
- Tesla was one of Bitcoin's largest and arguably most recognizable holders. Selling reserves to improve its liquidity situation may indicate that the company no longer believes in Bitcoin's upside potential in the current macroeconomic environment;
- Tesla currently holds 218 Bitcoin, although Elon Musk has conveyed that the company remains open to buying the 'king of cryptocurrencies' in the future. What this means to the market, more or less, is that any news of Tesla's renewed commitment to BTC could cause the price to spike again, although undoubtedly the 'authority of Elon Musk's 'diamond hands' in the cryptocurrency market has weakened;
- Tesla purchased Bitcoins in January 2021, when the price was hovering around $30,000 (according to Forbes). The reported sale in Q1 2022 means that the company didn't make money on this investment and 'slept through' the moment to earn a near 100% return in the spring and fall of 2021. The company is likely to have closed its Bitcoin investment neutrally on a so-called breakeven;
- Bitcoin is slipping again near the 200-session average at $22,600, which raises concerns around further movement in the cryptocurrency market. The price zone is now primary long-term support, and a potential entry below it could indicate that the crypto's bullish rebound was temporary. Additionally, the momentum associated with halving cycles indicates that bitcoin has not yet reached a bottom. According to halving cycles, the price bottom should be hit a year before halving which would indicate spring 2023. However, it is still uncertain whether the cycle will be preserved, 2022 is full of surprises and wreaks real havoc among risk assets like cryptocurrencies.
Bitcoin chart, W1 interval. The major cryptocurrency is clearly struggling to hold basic long-term support. The price has re-entered below the SMA200 moving average, below $22,600. If the downward movement accelerates a fall towards the psychological level of $20,000 is not excluded. On the other hand, a bullish rebound toward $24,000 could confirm a resurgent broader uptrend. Source: xStation5
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