Bitcoin and Tesla Slump Shakes Musk off First Position on Worlds Richest Man List

By: Dickson Arinze

February 25, 2021 5:33 AM

Tesla Bitcoin purchase has not been welcomed by investors as the company stock took a downside just after its $1.5 billion BTC investment was announced in late January.

Bitcoin, on the other hand, experience a swift correction of about 23% just hours after some unexpected social media activity by the then world richest man.

As a result of his tweet on social media which entails that the price of ETH and BTC is "high," the Bitcoin market price in response took a major tumble, and with a slump in his company's stock, he lost his title to Amazon founder Jess Bezos.

Tesla stock (TSLA) dropped to $698 from its high on January 26 of $890 recording a 21% loss at the time of writing. Analysts said the slump correlates with Teslas Bitcoin purchase.

On February 8, when the company announced it had already purchased $1.5 billion in Bitcoin, Tesla stock (TSLA) at the time was trading at $865. Just after the announcement, Tesla's stock crashed to $681 on February, 23. Although, several reasons could be behind the slide as it was reported by Yahoo Finance about quality control in China.

However, Fox Business blamed this week's Tesla stock drop on the company’s association with Bitcoin. Renowned analyst Dan Ives of Wedbush, who believes the move was a strategic one for the long-term.

“Investors are starting to tie Bitcoin and Tesla at the hip. While Tesla on paper made roughly a $1 billion on Bitcoin in a month that exceeded all its EV profhoursfell-off, the recent 48-hour sell-off in Bitcoin and added volatility has driven some investors to the exits on this name in the near-term,”

The company is estimated to own about 48,000 BTC, if calculated with Bitcoin's all-time high price Tesla's profit after the purchase of BTC would be in the region of one billion dollars.

Bitcoin price correction this week doesn't mean the company is at a loss as the buy price after the $1.5 billion investment was announced. the asset was still priced under $40,000 when the purchase was announced.