The cryptocurrency market experienced a significant crash on Thursday, resulting in over $1 billion in liquidations within the past 24 hours. Among the potential causes, Elon Musk’s SpaceX has been implicated as a contributing factor in the market upheaval.
The price of Bitcoin (BTC) experienced a rapid decline to approximately $25,300. This drop happened at the same time the Wall Street Journal (WSJ) published a report. The report focused on the financial status of the private aerospace company SpaceX.
According to the report, SpaceX had devalued its bitcoin investment by a combined sum of $373 million in the previous year and throughout 2021. Consequently, the company had also decided to divest from the cryptocurrency.
The term “devaluation” covers intentional BTC sales and a decrease in the company’s Bitcoin assets, compared to the average purchase price. WSJ didn’t offer specific details on the extent of SpaceX’s Bitcoin transactions or their timing in the past two years.
Impact of Elon Musk’s Bitcoin Investment and Influence on Cryptocurrency Market
Although Elon Musk confirmed having some Bitcoin investment personally and within SpaceX, the exact quantities were not revealed.
In contrast, Musk’s publicly traded company, Tesla, has been more forthcoming, revealing a $1.5 billion Bitcoin acquisition in February 2021.
Tesla’s Bitcoin holdings, which once reached a peak value of $2 billion, have been significantly reduced. The company has liquidated a considerable portion and now holds BTC worth $184 million as per recent earnings reports.
When Tesla revealed its Bitcoin investment, the cryptocurrency was trading at around $20,000, near its yearly low. Surprisingly, there was no significant price reaction to the news.
Musk’s influence historically affected Bitcoin’s value. An instance is his May 2021 statement that Tesla would stop accepting Bitcoin as payment, which led to a 50% drop in the cryptocurrency’s price.
Musk’s public statements and actions have also wielded sway over Dogecoin (DOGE), his favored cryptocurrency. In a notable instance, the value of Dogecoin surged by 25% after Musk replaced Twitter’s iconic bird logo with an image of a Shiba Inu in April.
Evergrande’s Influence, Regulatory Actions, and Market Predictions
Apart from SpaceX’s role, there’s speculation that the recent crypto market crash could be tied to the financial issues of Chinese real estate giant Evergrande. The company filed for bankruptcy protection in a Manhattan court on Thursday.
Bitcoin hadn’t seen values under $26,000 since mid-June. This period followed legal actions by the Securities and Exchange Commission (SEC) against major crypto exchanges Binance and Coinbase.
Glassnode, an on-chain analytics firm, had predicted increased market volatility. They anticipated that investors aiming to profit between $29,000 to $30,000 had probably already done so earlier this week.
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