Bitcoin, struggling to keep pace with its recovery, is trading under pressure at a price of $19,000. After the massive fall in BTC prices this year, Tesla faced a $440 million write-down on its bitcoin holdings.
Last year, in February 2021, Tesla placed $1.5 billion of its cash reserves in bitcoins. This created great euphoria in the market, with bitcoin peaking at $69,000 in November 2021. Although Tesla sold some of its BTC last year, it continues to hold the rest.
With the price of bitcoin having fallen more than 70% since the start of the year, Tesla must face impairment losses of around $440 million. Currently, the company’s bitcoin investments are worth an estimated $820 million. Three months ago, the company recorded the value of its bitcoin investments at $1.2 billion. This means that in just three months, the company saw the value of its bitcoin investments decrease by 33%.
Apart from its investments, Tesla also started accepting bitcoin payments for a very brief period. However, she later decided to reverse her decision citing environmental concerns related to bitcoin mining.
Tesla is not alone in parking some of its cash reserves in bitcoins. Other companies like MicroStrategy, Coinbase and Block INc. have taken this route.
Bitcoin (BTC) at a Critical Crossroads
Bitcoin continues to trade under pressure around the $19,100 levels. According to market analyst Ali Martinez:
Bitcoin transaction history shows that $BTC needs to recover $19,500 as support as soon as possible to avoid a descent towards $16,350.
However, if bitcoin (BTC) manages to record a sustained close above $19,600, we may see additional bullish price action forming up to $22,000. It will be very important to see what the market has to offer for the new week.