Can Tesla influence the market with its Bitcoin?

Tesla is the second-largest company in the world in terms of the amount of Bitcoin it owns, behind MicroStrategy. 

The value of Tesla’s Bitcoin

At the end of 2021, Tesla claimed to own nearly $2 billion worth of BTC, but in the meantime, their value has dropped significantly. 

Its current price of less than $40,000 may be in line with its purchase price, given that the company bought Bitcoin between late January and early February last year. According to some assumptions, its average purchase price would be around $35,000, while according to others it would be around $40,000. 

Will Tesla sell BTC?

In such a scenario, two questions must be asked: will they sell them? And if so, what impact will this have on the price? 

There is no real answer to the first question, as no one knows the company’s real financial strategies. 

However, given that the purchase was made with a long-term objective in mind, and given that the current price is in line with the purchase price, it is possible to assume that it is difficult for them to proceed with a sale in the short term. 

On the other hand, when the price fell below $30,000 last year, at the end of July, Tesla did not sell any of its BTC, so it seems unlikely that they will do so now. 

If, however, the price were to fall much further, the likelihood that it would dispose of its investment could increase. 

However, it is possible that the company, if it does not need cash, will consider selling some of its Bitcoin only in the opposite case, i.e. only if the price were to rise a lot, given its long-term investment strategy. 

As far as the impact on the market is concerned, should they do a large sale all of a sudden, there could certainly be consequences. 

The impact of Tesla’s decisions on the price of Bitcoin

There are at least two factors to take into account though, which could greatly change the actual impact on the price. 

The first factor is the amount of BTC liquidated, because if there were not many the impact could be very limited, if any at all. In the past, they already did a test sale, for an amount of about ten million dollars, and the impact on the price seemed to be irrelevant. 

The second factor is the speed with which the sold BTC would be liquidated. If everything happened in one go, the impact would be far greater than, for instance, a sale in small blocks spread over a long period of time. 

However, since there seems to be no intention to liquidate these positions any time soon, this scenario should be considered purely theoretical at this point. The fact remains that Elon Musk no longer seems particularly attracted to Bitcoin, but he does not have absolute power within Tesla to the extent that he probably cannot decide at will to liquidate all Bitcoin held by the company.