As bitcoin plummeted, Tesla’s bitcoin investment lost more than $500 million in the latest round of currency price declines, and institutions and individuals who were keen to chase cryptocurrency investments in the past also suffered a lot.
As of the 15th, Bitcoin fell 3.8% that day, the ninth consecutive day of decline, the longest losing streak since 2014, and the quotation approached the $20,000 mark.
At the start of the cryptocurrency boom in early 2021, Tesla poured a total of $1.5 billion into Bitcoin. A year after the investment, Tesla’s bitcoin holdings peaked at $2 billion earlier this year.
However, in just a few months, the cryptocurrency market has collectively collapsed, and the value of several major cryptocurrencies has experienced a “cliff-like” decline.
Tesla’s $1.5 billion investment in bitcoin is currently worth only $905 million, according to bitcoin data site Bitcoin treasury. This means that Tesla’s bitcoin investment has lost nearly $600 million in value.
For Tesla, however, the overall losses were limited, with bitcoin holdings worth only 10% of its cash position and 0.1% of its total market capitalization.
U.S. stock MicroStrategy, which ranks first in terms of currency holdings, is the company with the most bitcoin in the world, and its stock price plummeted 25% on Monday. In the recent decline, MicroStrategy’s stock price has been knocked back to its prototype, falling back to levels seen in August 2020, just as the company announced that it would bring Bitcoin to its balance sheet.
It can be seen that the more bitcoins are held, the worse the fall.
Bitcoin Crisis in El Salvador
Not only were large companies hit hard, but El Salvador, the first country in the world to declare bitcoin as the official legal tender, was also hit hard when bitcoin fell. The value of bitcoin held in the country is estimated to have shrunk by more than 65%.
The data shows that the country has lost more than $56 million in bitcoin on paper. Since the legalization of bitcoin in September, El Salvador has purchased 2,301 bitcoins at an average cost of $45,908 per token, for a total cost of about $106 million. Bitcoin fell to $21,339 as of Wednesday, and the country has lost more than half its investment in bitcoin.
Despite the setback, El Salvador President Nayib Bukele tweeted on Tuesday that he may continue to buy on dips.
El Salvador is due to pay $800 million in bonds by January, and Bitcoin’s slump has raised concerns about El Salvador’s cash shortage.
El Salvador’s finance minister, Alejandro Zelaya, laughed off these concerns, arguing that the financial risks posed by bitcoin are minimal.