I'm just here to say, the whole fiasco with Tesla accepting bitcoin really demonstrates why regulation is important.
Tesla announces on 8th Feb that it has 1.5bil in bitcoin and it will accept it for payments. The price rises 15% same day and continues to climb over the next week+ until it hits a peak at 150% of it's previous value. Then it starts to go through its usual fluctuations, at some point hitting a peak of 160% of it's previous value.
Then a few days ago Tesla announces it's no longer accepting bitcoin. The price immediately slides 10%. Later in the week as Elon Musk continues his twitter ramblings, he replies a single word 'indeed' to someone suggesting that Tesla may have sold its bitcoin. Bitcoin plummets further to 20% below pre-slide price, sitting somewhere between the price before the 8th feb announcement and after.
Tesla claims that this reversal is because they are now aware of the environmental impact of bitcoin. Which is really silly because it either means they either (1) spent 1.5bil to acquire assets that was glaringly against their business goals of improving sustainability but didn't realise it, (2) did know about the issues but didn't really care until public opinion became stronger, or (3) environmental issues is just an excuse to cover up the real decision factors - perhaps the realisation that bitcoin isn't a good medium of exchange, or worse perhaps they never planned to keep bitcoin for long.
The last point is interesting. There was a question of whether what Tesla did is considered a pump and dump scheme. This all depends on whether Tesla did indeed sell their bitcoin already, which Musk as of a few hours ago has clarified that they have not (leading to a small uptick in price again, remains to be seen if it will rise further).
But let's say they did sell. It doesn't matter why they made a reversal in their decision. The fact remains that they bought large numbers of an asset, caused a 50% increase in the price, then sold their assets.
If they had indeed done this, then it is a pump and dump scheme where Tesla could have well made a couple hundred million. I can't be sure about this, but if I am understanding it correctly, the fact that bitcoin is unregulated today may mean that there is no natural mechanism for recourse.
I'm sure something could still be brought against them but it would have to be a new lawsuit or something. I do think Elon Musk is a smart guy even if he is a little strange. So perhaps he knew better, and that's why Tesla didn't sell their bitcoin.
All the same though, I think it's ridiculous how Elon Musk has been able to get away with moving the market with impunity. It's ridiculous how in general tweeting moves markets these days.
As always, winners will laugh. Those who bought bitcoin early and benefitted from Elon's actions will have struck a windfall. Those who only got in after the hype continued to build, thinking that Tesla's acceptance of bitcoin was truly about to herald in a new age of bitcoin as a currency, well they're left to hold the bags. As always, my concern is with people who don't know much of what they are getting into and got swept up by the hype. Sometimes motivated by greed, sometimes by FOMO, and sometimes desperation.
Of course hey, Elon could tweet tomorrow that he changed his mind again and is now accepting bitcoin again. In that regard we can't call them bagholders yet because who ever knows what happens next with bitcoin. Maybe the bagholders might still get their money back. If you believe the stock-to-flow model, they should still be well on their way to becoming billionaires by 2045.
Following all these crazy things happening in the financial markets have brought me from curiosity to just generally being annoyed at all that is happening.
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