- The bear market generates a drop of more than 500 million dollars for Tesla’s Bitcoin investment.
- MicroStrategy is also in the red and could face a margin call from Silvergate.
- El Salvador has also been affected, as its Bitcoin holdings only represent 47% of its initial investment.
In the last two years, the number of companies interested in Bitcoin has grown, highlighting among them MicroStrategy and Tesla, as well as a State: El Salvador.
Currently, the market for Bitcoin and other cryptocurrencies is going through a bearish period, which has led the main cryptocurrency to trade even 70% below its historical maximum of 69,000 dollars (ATH), reached in November of last year. Against this background, how are the investments in Bitcoin of such organizations?
Tesla’s situation
In January of last year, Elon Musk’s company Tesla Motors invested $1.5 billion in Bitcoin, for an estimated around 48,000 BTC, with an average price of just over $31,000.
Later, in April of last year, Tesla reported the sale of around 5,000 BTC, equivalent to 272 million dollars, which represented about 10% of its holdings in this cryptocurrency.
According to Musk, the sale was made to demonstrate the liquidity of the Bitcoin market. From this sale, the company claimed to have made $101 million in profit.
However, in the current bear market, with Bitcoin priced at $20,609, Tesla’s investment in Bitcoin is in the red. According to the Bitcoin Treasuries website, Tesla holds 43,200 BTC, which at the current BTC price is valued at just over $890 million, or just 59% of its initial investment.
But if the above is added to the $101 million of previous earnings, and if Tesla were to sell its BTC today, the company’s loss would be $512 million, or 34% of its initial investment.
How much has MicroStrategy’s investment in Bitcoin dropped?
Only one public company listed on the US stock exchange has invested more in Bitcoin than Tesla: it is MicroStrategy, a renowned firm focused on Business Intelligence and led by Michael Saylor. Since the third quarter of 2020, MicroStrategy has been making regular purchases of BTC, including taking out loans. Also, MicroStrategy has not sold any of its purchased bitcoins.
According to Bitcoin Treasuries, MicroStrategy accumulates a total of 129,218 bitcoins, with an investment of about 3,966 million dollars. In other words, MicroStrategy purchased these coins at an average price of $30,691.
When comparing these figures with the current price of Bitcoin (20,609 USD), MicroStrategy would currently register a 30% loss if it sold its BTC, and that is that its holdings today are equivalent to just over 2,663 million dollars, that is, the fall has been 1,303 million dollars.
Likewise, with the price of Bitcoin below 21,000 dollars, it is presumed that MicroStrategy could face a “margin call” or demand for additional capital from Silvergate, a bank that granted a loan in the amount of 205 million dollars. to buy more BTC. However, in recent days, MicroStrategy revealed to Reuters that it has received no such request.
How has El Salvador’s Bitcoin investment been affected?
El Salvador, the pioneer country in terms of recognizing Bitcoin as legal tender, has been accumulating BTC since September of last year. On September 6, one day before the Bitcoin Law came into force, President Nayib Bukele announced via Twitter the first purchase of 200 BTC from the Central American country.
Since then and to date, President Bukele has announced BTC purchases nine times, the most recent being 500 BTC, on May 9. According to the El Salvador Bitcoin Portfolio Tracker, it is estimated that El Salvador accumulates a total of 2,301 BTC, purchased at an average price of 44,189 USD, just over double the current price of BTC.
So far, El Salvador has invested just over $101.6 million in Bitcoin, but in the current bear market, its holdings are equivalent to around $47.4 million, which is a drop of 53% or 54, $2 million, in fiat money terms.
