The recent turmoil in the cryptocurrency market, allegedly triggered by a variety of factors including SpaceX led by Elon Musk, has led to substantial losses, with over $1 billion in liquidations recorded within the last 24 hours. Here’s a summary of the events.
Bitcoin (BTC) experienced a sudden and significant drop to nearly $25,300, coinciding with the publication of a report by the Wall Street Journal (WSJ) that offered unusual insights into the financials of the privately-owned aerospace company.
The report revealed that SpaceX had “devalued its bitcoin holdings by a total of $373 million over the past year, including 2021, and had also divested from the cryptocurrency.”
This devaluation might be attributed to both intentional sales of BTC and a decline in the cryptocurrency’s value relative to the average purchase price held by the company. Unfortunately, WSJ did not provide specific figures regarding the amount of Bitcoin sold or acquired by SpaceX, nor the timing of these transactions over the past two years.
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Elon Musk has previously acknowledged owning some Bitcoin on a personal level, as well as through SpaceX, although he refrained from specifying the exact amounts.
Tesla, the prominent company led by Musk, was more transparent about its involvement, having announced a $1.5 billion Bitcoin investment in February 2021. Although the investment’s value briefly rose to $2 billion, the majority of the BTC was subsequently sold off. In the latest earnings reports, the remaining Bitcoin was valued at $184 million.
When the initial announcement was made, Bitcoin was already trading at around $20,000, a figure close to its annual low, which didn’t cause any significant market reaction.
While Musk’s influence has previously impacted Bitcoin’s price—such as his announcement that Tesla would no longer accept Bitcoin payments for car purchases in May 2021, resulting in a 50% drop in the asset’s value—his public statements have also wielded influence over the value of his favored cryptocurrency, Dogecoin (DOGE).
For instance, in April, after Musk changed Twitter’s logo to an image of a Shiba Inu (the breed associated with Dogecoin), the price of DOGE surged by 25%.
The reason behind the recent Bitcoin collapse extends beyond SpaceX. Some speculators suggest a connection to the financial woes of Evergrande, a major Chinese real estate company that filed for bankruptcy protection in a Manhattan court.
Bitcoin had not dipped below the $26,000 mark since mid-June, a period that followed legal actions taken against crypto exchange giants Binance and Coinbase by the Securities and Exchange Commission (SEC).
Glassnode’s on-chain analysts had foreseen the increase in market volatility, predicting earlier in the week that all investors seeking profit within the $29,000 to $30,000 price range had already acted upon their intentions.
