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Bitcoin collapses by nearly $2,000 and Elon Musk’s company, SpaceX sold its stake: the curious coincidence

Although it is an as-yet unconfirmed story, Elon Musk’s company SpaceX has sold its stake in Bitcoin, coinciding with an unexpected collapse of the cryptocurrency,

The timing of Bitcoin’s flash crash, which saw the cryptocurrency plummet by more than $2,000 in a matter of minutes, is undeniably curious.

The event occurred shortly after a rather sluggish trading day, which had already seen Bitcoin’s value slip from its recent high above $29,000 to around $27,500. 

Such a drop, in itself, could have been dismissed as a normal market fluctuation, but it was the subsequent collapse that raised eyebrows.

Bitcoin collapses, Elon Musk’s SpaceX gives up its $373 million share 

News emerged, almost summoned by fate, that Elon Musk‘s SpaceX had divested its holdings in Bitcoin. 

The market, always sensitive to news about high-profile figures like Musk, seemed to react to this news by executing a massive order dump, triggering a cascade of sell orders that quickly erased any price support.

However, these reports on SpaceX‘s Bitcoin holdings appear to be a bit stale, mirroring a similar move by Tesla weeks earlier. 

The documents indicate that SpaceX not only wrote down the value of its Bitcoin holdings by $373 million in 2020 and 2021, but also decided to sell the cryptocurrency. 

Musk, known for his interest in cryptocurrencies, has often mentioned cryptocurrencies on his social media accounts over the years.

In particular, some analysts question whether the SpaceX news was really the catalyst for the sudden crash or just a convenient scapegoat for a market that was already poised for a correction. 

Many analysts assess the situation: is Elon Musk to blame?

Michael Safai, partner at quantitative trading firm Dexterity Capital, said the lack of positive news from the cryptocurrency world has left traders unenthusiastic. 

According to Safai, the recent spike in interest rates and the general decline in risk appetite are prompting non-crypto traders to fall back on safer investment options.

Shiliang Tang, chief investment officer of cryptocurrency-focused investment firm LedgerPrime, presented another perspective on the situation. 

He noted that initial optimism about the resolution of the Grayscale Bitcoin ETF faded during the week and that traditional markets also showed signs of weakness. 

Tang noted that the S&P 500 and technology stocks underperformed, 10-year interest rates rose, and the dollar strengthened. All these factors cast a shadow over risk assets, including cryptocurrencies.

Adding to the confluence of events was a hiccup in the operations of Coinbase, one of the largest cryptocurrency exchanges. Just as the flash crash occurred, Coinbase announced technical problems and assured its users that their funds would remain safe. 

Although this did not directly contribute to the crash, it certainly added to the negative sentiment that pervaded the market at the time.

Conclusion: no one knows why Bitcoin crashed, but the debate is open

As the dust settles and the market grapples with the aftermath of this flash crash, one undeniable fact emerges: the entire upward trajectory that Bitcoin was on since the BlackRock-induced euphoria of mid-June has been all but erased. 

This is a reminder that in the cryptocurrency realm, stability is often an ephemeral concept. 

Whether the SpaceX news was a trigger, a narrative of convenience or a mere coincidence, the incident underscores the continuing uncertainty that characterizes the world of digital assets. 

In this context, it is best to approach any assertion of stability with a strong dose of skepticism.