Money Stuff: Tesla Sold Some Bitcoins
bloomberg.com
bloomberg.com
2. Tesla announces that Bitcoin is good now and that it bought some.
3. The price of Bitcoin goes up, because institutional adoption of Bitcoin is good for its price, but also because, by the Elon Markets Hypothesis, anything that Musk buys goes up.
4. Tesla sells some Bitcoin, making a profit.
5. Musk tweets that the price of Bitcoin is too high.
6. Bitcoin prices go down due to the Elon Markets Hypothesis.
7. Go to Step 1.
How is that not illegal?
If we look at it from stocks, if Tesla bought a million shares of random X penny stock, and then Elon Musk tweeted that this random penny stock is now amazing. And then once it reached $10 they sold 10% at 1000% percent profit.
That's illegal, so why is crypto not?
Edit: It's actually legal... so nevermind.
Obviously it's not strictly illegal to purchase stock and then say you did, but it doesn't make sense that you would need that clarified.
Financial transparency isn't illegal by itself.
Also, if what Tesla did was illegal then aren't many authors on Bloomberg/SeekingAlpha/ CNBC/etc also just as liable? Seems like what we're discussing is a common occurrence and securities cases are often about people misleading about their own stock/company rather than third party/other tickers (even if they hold shares, or in this case coin).
> If we look at it from stocks, if Tesla bought a million shares of random X penny stock, and then Elon Musk tweeted that this random penny stock is now amazing. And then once it reached $10 they sold 10% at 1000% percent profit. That's illegal, so why is crypto not?
I'm pretty sure that is legal as long as you disclose that you own it. I think you're allowed to:
1. say: "I own a stock." 2. say: "It's a great stock." 3. (stock price goes up) 4. (sell stock)
And intuitively, this should be legal. If you disclose your position, you should be able to talk about how great it is, as long as you don't lie.
What I said above is completely legal you just need to disclose you own X penny stock.
So random person with a bunch of followers can legit buy a million dollars of a stock, go on twitter spouting about it (even though just the increase of mentions are likely to make it become more noticed and thus gain value) and make a bunch of money.
That's fantastic...
But I have a huge problem with thinking that Elons tweets about BTC is the primary mover of BTC vs USD.. The dollar value of BTC is basicly a random number generator..
What we're seeing is a wild west and I don't think it will last much longer.
Crypto-fans want a libertarian free-for-all without government regulation or interference. That's what they're getting.
Good luck, guys!
Of course, good luck proving it, or telling the difference, in many cases. But if you cyclically go from “Bitcoin is the future” to “nah”, that might just tip it.
BTC subsequently goes up sigfinicantly. Now, Tesla has y% of it's holding in BTC, with y larger than x.
Tesla now sells ~100M$ of BTC, which ballparks looks about right to bring y closer to x.
This is what many individuals and investors do all the time, it's just rebalancing and it's the smart thing to do.
Can someone who understands finance explain what this means in layman’s terms? How is it just saying they sold Bitcoin so they could have cash on hand?
Having $XM USD in BTC means nothing if you can't convert it back into USD. This sell (at least according to Elon) was done just to prove to Tesla/Board/etc/whatever that it was fine to hold BTC because they could convert back to USD if needed at any time.
that is to say, I don't think tesla had any worries that someone wasn't ready to take the other side of their ask, very likely the round trip was already arranged from the day they agreed to take a billion in BTC onto their balance sheet. if elon can 'prove' the market has liquidity, everyone backing Bitcoin wins big, Tesla included.
Tesla simply sold just enough BTC to book enough profit to meet quarterly EPS estimates.
[1] https://satoshi.nakamotoinstitute.org/emails/cryptography/17... It might make sense just to get some in case it catches on. If enough people think the same way, that becomes a self fulfilling prophecy.
[1] https://bitcoin.stackexchange.com/questions/10486/when-will-...
If you're open to alternative hypotheses, do read Breedlove's, "Money, Bitcoin, and Time." His writing is an excellent guide in answering the first principles question "what is money?"
https://breedlove22.medium.com/money-bitcoin-and-time-part-2...
Buying/selling just because other people buy/sell is a great way to lose money.
> Obviously if you are a transformative electric car company it is better to make your profits by selling transformative electric cars than by moving the price of cryptocurrency with your tweets. Selling the cars is better for the environment, better for the world; it has higher growth potential; it deserves a higher multiple. My point is only that, for Elon Musk right now, moving the price of cryptocurrency with his tweets is really easy and lucrative and, in the short term, sustainable. Among the things he tweets about, it is probably the one that distracts him least from his work, and the one with the highest returns for shareholders. He should do it every quarter.
But you should also read through the story about the deli if you don't want a brick through your window.
March: sold hundreds of millions of dollars worth of them
April: “As we _generally_ intend to hold these assets long-term”
(emphasis added)
By being one of the first mainstream large companies to buy bitcoin you are sending out a strong positive signal on bitcoin which is likely to move price up.
So just buy it, take your premium and then sell some.
Let's just say Tesla doesn't have the governance of a normal public company.
Musk tweeted about Signal and they went from 50k downloads a day to 1.3M [1]. An unrelated company, Signal Advance, saw their stock soar. Which... I mean... wow.
[1] https://www.cnet.com/how-to/what-is-signal-everything-you-ne...
Certainly Musk has an advantage here but other companies could have done the same and probably still succeeded. The odds and outcome would not have been exactly the same, which is true of literally everything in life for different people.
...
> other companies could have done the same and probably still succeeded.
Come the fuck on. I'm literally replying to this idea that any other company could do the same.
Your exact words:
> any large company could have pulled it off not just Musk
Premise 2: No company that Musk is not involved with could gain a competitive advantage via the signal they send with a bitcoin purchase.
Premise 1 and premise 2 have no relationship. Stating something about one does not tell you anything about the other. You could logically believe any combination of these premises
So by stating 1, I'm not implying 2. In fact I'm agreeing with 1 and refuting 2. Whereas you seem to be implying that if I believe 1 I have to believe 2. This is not the case.
https://www.justice.gov/opa/pr/john-mcafee-indicted-tax-evas...
It's going to be harder for Tesla to maintain their environmental appeal with Musk out there promoting environment-destroying crypto. I'm surprised this hasn't been pointed out more often.
It would be like a public figure saying bad things about Nazi Germany while living in Nazi Germany during WW2.
Bitcoin is more like a country than a company... Except it's even more dangerous because all its citizens are anonymous; they operate with total impunity.
They could remove anyone who is an obstacle to the Bitcoin price and nobody would know who did it. Worse than that, any attempt at investigating the crime would be anonymously bribed to a halt.
Not sure if it's like this yet, but seems like a definite possibility.