Crypto weekly update
28. July 2022  • clock 5 min •  Daniel Mitrovsky

Tesla Has Sold off Most of Its Bitcoins – Crypto Weekly Update

This week, the total market capitalization exceeded €1.03 trillion. The increase at the 7-day interval is 3.00%. Bitcoin decreased by 1.60% during the week to a current value of over €22,500. Bitcoin dominance is 41.7%.

Source: Coinmarketcap

Tesla Has Sold off Most of Its Bitcoins

A financial report from Elon Musk-led Tesla has revealed that the electric vehicle maker has sold off most of its bitcoin reserves.

According to financial statements, Tesla has held bitcoin for the last three quarters without any interventions. The company’s only intervention in its bitcoin reserves was made in March 2021, when Tesla sold off roughly 10% of its reserves to prove bitcoin’s liquidity as an alternative to holding cash on its balance sheet. In its first-quarter report, Tesla had $1.261 billion worth of Bitcoin on its balance sheet at the end of March.

However, the sale of bitcoins in the second quarter is no longer about demonstrating bitcoin’s liquidity. Tesla sold off approximately 75% of its bitcoin reserves in the second quarter for $936 million in cash, leaving the company with $218 million in digital assets after the sale.

The company did not disclose at what price it sold the bitcoins, nor did it indicate whether it made a loss on the deal. However, based on Bitcoin’s price performance in the second quarter, it is safe to assume that Tesla sold its bitcoins somewhere in the price range between $46,000 and $19,000. However, analysts assume that Tesla sold bitcoins for around $29,000, which would mean a loss, as it acquired its bitcoins in February 2021 in the $32,000 to $33,000 price range.

“The reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the Covid lockdowns in China would alleviate, so it was important for us to maximize our cash position,” Musk said in an earnings call on Wednesday. “This should not be taken as some verdict on bitcoin,” he said, adding that Tesla is open to increasing its crypto holdings in the future. Source

Survey: One Billion Users by 2030

A joint study conducted by Boston Consulting Group (BCG), Bitget and Foresight Ventures revealed that the global adoption of digital assets is still in its early days. However, if the current trend of adoption continues, the total number of cryptocurrency users should tap one billion by 2030

According to the research, cryptocurrency adoption is still at its baseline, as only 0.3% of total individual wealth is distributed in cryptocurrencies. By comparison, roughly 25% of investors’ funds are allocated to equities.

North Americans are the most inclined to invest large sums in digital assets, while Africans are at the lowest. On average, a single investor from the African continent holds around $190 worth of crypto.

Despite low adoption rates and the recent market downturn, the companies that conducted the survey expect a new wave of people to enter the cryptocurrency ecosystem in the coming years. Comparing the development of the cryptocurrency market to the development of the Internet in the 1990s, it was concluded that the number of cryptocurrency owners and users could likely reach up to one billion by 2030. Source

Institutions With Capital Inflows

Crypto investment products are coming to life again. The latest report from CoinShares Vol. 90 revealed that digital asset investment products saw inflows totalling $30 million last week.

Bitcoin saw inflows totaling $19 million last week, followed by the second most popular cryptocurrency, Ethereum, with weekly inflows of $8 million. Since the beginning of July, Bitcoin has seen a total capital inflow of $221.5 million. Cryptocurrency Ethereum fared worse, from which institutions poured $315.8 million during July.

The massive inflow from Switzerland is a big surprise. Approximately $16 million (53%) of the total $30 million inflow over the past week came from Swiss investors. In addition, since the beginning of this month, Swiss investors have poured $355.6 million into crypto funds, up to 8x more than U.S. investors. Source

Elimination of Tax on Crypto Transactions

On Tuesday, a bipartisan bill was introduced in the U.S. Senate that seeks to eliminate taxes on crypto transactions of under $50.

The Cryptocurrency Fairness Tax Act, introduced by Senators Patrick Toomey (Republicans) and Kyrsten Sinema (Democrats), would exempt reporting crypto transactions of less than $50 or trades in which a person earns less than $50.

“While digital currencies have the potential to become an ordinary part of Americans’ everyday lives, our current tax code stands in the way,” said Toomey, adding that the bill would help Americans “use cryptocurrencies more easily as an everyday method of payment by exempting from taxes small personal transactions like buying a cup of coffee.”

The bill, introduced on Tuesday, is in addition to the Virtual Currency Tax Fairness Act, which aims to exempt crypto transactions under $200 from paying income tax. Source

FTX Is Considering the Acquisition of Bithumb

Cryptocurrency exchange FTX has reportedly started initial acquisition talks regarding the buyout of well-known crypto exchange Bithumb.

One of the stakeholders in the crypto exchange Bithumb has confirmed discussions about the potential sale of its stake in Bithumb to the Sam Bankman-Fried’s-led company. However, It is not known whether there will be a full acquisition of Bithumb or joint management of the exchange.

The South Korean cryptocurrency exchange faced several lawsuits starting in 2020 when authorities raided its office as part of an investigation against the former Chairman, Lee Jung-hoon. A year later, the prosecutors indicted Jung-hoon for allegedly swindling $100 million.

The exchange has been put up for sale in the past, with many entities vying for a stake in Bithumb. One of the bidders in the past was reportedly Wall Street giant Morgan Stanley. Source

Interesting Fact: The European Central Bank Raised Interest Rates

The European Central Bank (ECB) raised interest rates for the first time in more than 11 years. It has been forced to do so by steadily rising inflation spiraling out of control in the eurozone.

The Governing Council decided to raise the three key ECB interest rates by 50 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 0.50%, 0.75% and 0.00%, respectively, with effect from 27 July 2022.

Consumer prices in the euro area rose by a record 8.6% year-on-year, mainly driven by rising food, fuel and energy prices. Current inflation is much above the ECB’s inflation target of around 2%. Source

Start investing safely in cryptocurrencies now.

Avatar photo

Daniel Mitrovsky


Share with others

More articles with Fumbi