Tesla CEO Elon Musk lost his crown as the richest man in the world after a sharp correction in Bitcoin and a drop in his company’s shares that some analysts believe are correlated.
Tesla (TSLA) shares fell 21% from their $ 890 high on January 26, accelerating those losses in the past two days to a fall to $ 698. Electric vehicle maker shares fell up to 13% on Tuesday – February 23, the worst day of the stock since the beginning of September.
Fox Business blamed this week’s fall in shares in the company’s association with Bitcoin, citing Wedbush analyst Dan Ives, who also said he believed the move was strategic for the long term.
“Investors are starting to tie Bitcoin and Tesla on the hip. While Tesla on paper made about $ 1 billion with Bitcoin in a month that exceeded all of its 2020 EV profits, the recent 48-hour Bitcoin sale and increased volatility has prompted some investors to abandon this name in the short term, ”
Tesla’s shares traded at around $ 865 on February 8, when it was announced that it had purchased $ 1.5 billion in Bitcoin. It hit a $ 681 low on February 23, according to Yahoo Finance. However, reports of quality control problems in China may also have affected the price.
Tesla owns about 48,000 BTC, which means that paper profits were around $ 1 billion by the time the asset peaked at just over $ 58,000 on February 21.
Despite this week’s price drop, the company is still profiting from the purchase of Bitcoin, as the asset was quoted at just over $ 39,000 when the purchase announcement was made (and the purchase took place before that).
The fall in Telsa’s shares knocked Musk off the top of the Bloomberg Billionaires Index, with recent losses reported at $ 3.56 billion. Jeff Bezos tops the list again with an estimated net worth of $ 187 billion, while Musk has $ 180 billion, according to Bloomberg.
At the time of this writing, Bitcoin prices have been corrected by 17% to around $ 48,000, marking a drop of $ 10,000 in just three days. In terms of retraction, the markets are accustomed to much larger ones, such as the decline of mid-January, which resulted in a 30% correction for BTC.