Will Tesla’s Selling Push Bitcoin Back Into Capitulation?

Key Insights:

• Tesla announced the selling of 75% of its Bitcoin holdings.
• Bitcoin took a dip back into the $22k zone before rising back to $23.1k.
• The arrival of earning reports from other major players will also have an impact on the crypto market.

Back in May 2021, Tesla created literal shockwaves when it announced that the company was suspending the acceptance of Bitcoin as a payment method. This resulted in one of the worst market crashes in the history of crypto.

Now, 14 months later, the company has made another similar move, which could have a similar impact on the market.

Tesla Dumps Bitcoin

Figuratively and literally. Figuratively was last year for the aforementioned reason and literally was in the previous 24 hours when it dumped 75% of its holdings.

This $936 million sale is actually the second of its kind, as back in April 2021 itself, Tesla had sold 10% of its then $1.5 billion worth of holding.

Elon Musk, the Chief Executive Officer (CEO) of Tesla, justified this move on the earnings conference call, saying Tesla decided to sell off its Bitcoin holdings to maximize its cash position, citing uncertainty due to Covid shutdowns.

At the moment, the company’s digital asset holdings have been reduced to just $218 million, and the announcement and the selling had an impact on the crypto market, albeit not as terrible as it did back in May 2021.

Bitcoin Takes a Dip

Declining by almost 4.5% in the last 24 hours, Bitcoin could be seen trading at $23.1k, maintaining its position after nearly sliding to $22.3k during the intra-day trading.

The potential direction the king coin might take after these announcements are uncertain. Primarily because the price indicators are still holding on to their bullishness.

The Parabolic SAR is still indicating an active uptrend on the daily chart evinced by the presence of the white dots underneath the candlesticks.

Secondly, the MACD indicator is also highlighting a bullish crossover with the bars keeping above the neutral line.

Furthermore, the Relative Strength Index (RSI) is still persisting in the bullish zone, far away from a trend reversal.

However, one must not forget the high correlation of 0.69 Bitcoin shares with the stock market, which might flip this bullishness into bearishness soon.

The earnings reports of many major companies such as Amazon, Apple, Facebook as well as Tesla will be coming out in the next few weeks. If the earnings cause the stock market to tumble, Bitcoin will too.

This could lead to the king coin falling into capitulation. Bitcoin escaped this zone less than two weeks ago, which it had last visited back in March 2020 following the Covid-19 crash, which caused significant losses.

Thus, Bitcoin’s path will also be charged depending on where the stock market stands over the coming weeks.