- Bitcoin gains after Tesla reports profit from its investment in the cryptocurrency and indicates commitment to the digital asset
- Companies looking to boost their balance sheets, especially in the face of lackluster profits during reporting season may show also be looking to Bitcoin for solace
After falling to its lowest level in seven weeks on Monday and breaking below its 100-day moving average late last week for the first time since early October, Bitcoin is rebounding again on the back of positive news out of Tesla.
Bitcoin has stumbled since reaching a record $64,870 almost two weeks ago, buoyed by enthusiasm from the Coinbase Global (+4.44%) listing.
But a power station failure in an important cryptocurrency mining region in China and the collapse of two cryptocurrency exchanges in Turkey at the end of last week depressed sentiment amid debate about whether cryptocurrencies could be in a bubble and whether a return to 2018’s crash was being precipitated.
The lack of momentum over the weekend continued despite another potential reference to cryptocurrencies from Elon Musk on Twitter (-0.46%) on Saturday who asked, “What does the future hodl?”
“Hodl” has entered the cryptocurrency lexicon as meaning to hold on to cryptocurrencies in anticipation of higher prices.
But this week, Bitcoin rose after Tesla reported a US$272 million gain on “digital assets” after its US$1.5 billion investment in the cryptocurrency.
The electric vehicle market leader said Monday it generated US$101 million in income from the investment, helping it beat analysts’ estimates for profit in the first quarter of the year – a large portion of which were derived from capital gains on Bitcoin.
Following the report, Bitcoin gained as much as 1.9% and traded above $54,000 after Tesla’s chief financial officer reiterated the company’s commitment to the cryptocurrency.
On the earnings call, Tesla CFO Zachary Kirkhorn said,
“We do believe long-term in the value of Bitcoin. It is our intent to hold what we have long-term and continue to accumulate Bitcoin from transactions from our customers as they purchase vehicles.”
Earlier this year, as many as 5% of CFOs and finance executives surveyed by Gartner, intended to invest in Bitcoin, after Tesla announced such investment.