Elon Musk, the CEO of Tesla Inc. (Tesla shares - ticker TSLA) and SpaceX, has long been a supporter of Bitcoin (BTC) and meme coins, Dogecoin (DOGE) and Shiba Inu Coin (SHIB).
References to cryptocurrencies have appeared frequently on Musk's Twitter account, with Tesla and SpaceX pawns in the price movements of BTC, DOGE and SHIB, in particular.
Ultimately, support tweets, Tesla and SpaceX company announcements, and interviews have raised doubts and questioned whether Musk's comments are similar to market manipulation.
More significantly, the latest corporate news suggests a shift in sentiment towards cryptocurrencies or perhaps a show of strength in the cryptocurrency market.
Tesla Inc. downloads Bitcoin holdings without notice
News came on Wednesday that Tesla has dumped 75% of its holdings in cryptocurrencies. According to Reuters:
"Elon Musk cited concerns about his company's overall liquidity as the reason for the sale."
In total, Tesla sold $ 936 million equivalent of BTC in the second quarter, a year after buying $ 1,5 billion near the market high.
Elaborating on liquidity concerns, Elon Musk said:
“It was important for us to maximize our cash position. We are certainly open to increasing our bitcoin holdings in the future, so this shouldn't be interpreted as a verdict on bitcoin. It's just that we are worried about the overall liquidity of the company ”.
However, Musk confirmed that the company has not dumped its stakes in Dogecoin (DOGE).
On February 8, 2021, the news of the purchase of bitcoin by Tesla for 1,5 billion dollars arrived. However, unlike other long-term BTC buyers, also known as Bitcoin Whales, Tesla flooded the market with a substantial portion of the 2021 investment, contributing to the decline in BTC and the cryptocurrency market in general.
Although Musk pointed out that DOGE did not suffer the same fate, DOGE and SHIB are now facing similar prospects. Neither DOGE nor SHIB have demonstrated price stability such as to warrant special treatment.
The Musk effect was evident and the cryptocurrency market reacted to the news.
Bitcoin fell 5,45% from the day's high of $ 24.276 before finding support to end the day with a 0,76% loss. On the contrary, DOGE reacted positively, rising by 1,59% and going against the trend of the market.
References to DOGE holding could be considered price manipulation. In June 2022, Musk spoke to Bloomberg TV, citing his support for DOGE. Musk expressed support for him in response to requests from DOGE investors asking Musk to reiterate his support for meme coins.
During the interview, Musk also stated that the amounts of BTC held are insignificant compared to the cash assets, in reference to Tesla and SpaceX.
Additionally, Musk expressed his support despite an investor filing a $ 258 billion lawsuit against Musk, SpaceX and Tesla Inc. for claiming that "Dogecoin is a legitimate investment when it has no value."
Elon Musk and the great failures that preceded Tesla and SpaceX
After an uncertain start, Tesla Inc. has established itself as a profitable car maker, with sales of more than $ 18 billion. While SpaceX is on a firmer foundation, Musk has had a stormy past to say the least. A series of failures took the polish off his resume.
Among Musk's best-known moments to forget are an unsuccessful application for a job at Netscape, a departure from Zip2 as CEO, a departure from PayPal, and a series of failed rocket launches.
For investors looking to ride in Musk's trail, the decision to dump 75% of Tesla's BTC holdings is a warning to holders of DOGE and SHIB.
In June, Elon Musk said holdings in BTC were negligible compared to cash assets. Dogecoin could suffer a similar fate if Musk were to dump the DOGE holdings. Musk may even suspend DOGE payments for SpaceX and Tesla cargo.
Dogecoin had its big moment on January 29, 2021, when DOGE recorded a 166% surge on news of Elon Musk's purchase of DOGE. Musk did not provide any details on the purchase of DOGE. Despite this, DOGE hit an all-time high of 0,7398 on August 5, 2021, before plunging to a current year low of $ 0,0491 on June 18, 2022.
Buyers entering around August 2021 levels will be unhappy, despite Musk's efforts to bounce DOGE on several occasions. Looking at the DOGE daily price chart, Musk's price spikes are evident. However, these have not reversed the downward trend since August 2021.
In an interview with Bloomberg TV in June, Elon Musk made a comment that should resonate with cryptocurrency investors.
"I never said people should invest in crypto."
