Crypto Rally Fizzles Amidst Tesla’s Bitcoin Sale
Cryptocurrencies retreated early on Thursday, with market capitalization falling to $1.02 trillion, versus $1.08 trillion, the day before.
Bitcoin slumped more than 4 percent, amidst reports that Tesla liquidated 75 percent of its bitcoin holdings at a 9 percent loss in the second quarter of 2022. Tesla CEO Elon Musk attributed the sale to the Covid lockdown in China and the urge to maximize cash position. He also denied the sale was a verdict on Bitcoin and placed on record his openness to adding further bitcoin to the portfolio.
Bitcoin touched a high of $24,196.82 in the past 24 hours. Bitcoin has been hitting higher levels of “day-high” since July 12.
Bitcoin investors are also bracing for the release of 142k BTC by the rehabilitation trustee to Mt Gox creditors. The actual impact of the same on prices could depend on how the creditors chose to receive the proceeds. Creditors are required to register online and choose their preferred compensation method, including whether they would like to be compensated in USD, BTC, or BCH.
Japan-based Mt. Gox cryptocurrency exchange that operated between 2010 and 2014 once accounted for 70 percent of all Bitcoin transactions. Following a hack by which the exchange lost its bitcoins as well as those of its customers, it filed for bankruptcy in 2014.
Ethereum is currently trading at $1490.47, having shed 6.6 percent in the past 24 hours. ETH traded in the range of $1,612.65 and $1,472.19 in the past 24 hours.
Only 28th ranked Monero (XMR) is trading with overnight gains of more than 1 percent.
The Wall Street Journal on Wednesday reported that Crypto exchange Vauld Group has filed a moratorium application aimed at securing the breathing space it requires to prepare for the intended restructuring. The lender, backed by Peter Thiel and Coinbase Inc., had in the beginning of July, paused withdrawals, trading and deposits on its platform citing volatile market conditions and financial difficulties facing key business partners.
Meanwhile, another Singapore based crypto exchange Zipmex Exchange has paused withdrawals. The exchange reportedly had an exposure on beleaguered Babel finance and coupled with the crypto market turbulence, it appears to have succumbed to the financial difficulties.
The recent episodes of collapses in the crypto system have triggered questions on the extent of risk management culture in the crypto entities. Whether the risk events are attributed to poor credit or market risk management or something specific to the crypto industry is a moot question. While there appears to be a deficit in risk management oversight, time would only reveal the extent of disregard for sound risk management practices.
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