Tesla announced Monday it has bought $1.5 billion worth of bitcoin (CNBC's news 8Feb)
In a filing with the Securities and Exchange Commission, the company said it bought the bitcoin for “more flexibility to further diversify and maximize returns on our cash.”
Tesla also said it will start accepting payments in bitcoin in exchange for its products “subject to applicable laws and initially on a limited basis. That would make Tesla the first major automaker to do so. The $1.5 billion worth of bitcoin will give Tesla liquidity in the cryptocurrency once it starts accepting it for payments.
Tesla’s move into bitcoin represents an investment of a significant percentage of its cash in the investment. The company had more than $19 billion in cash and cash equivalents on hand at the end of 2020, according to its most recent filing.
The moves raise questions around CEO Elon Musk’s recent behavior on Twitter, where he has been credited for increasing the prices of cryptocurrencies like bitcoin and dogecoin by posting positive messages that have encouraged more people to buy the digital currencies.
Two weeks ago, the billionaire Tesla owned added the hashtag #bitcoin to his Twitter bio, a move that helped to briefly push up the price of the cryptocurrency by as much as 20%. Two days later, he said on the social medial chat site Clubhouse: “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.”
Bitcoin prices surged to new highs Monday following Tesla’s announcement, reaching a price of at least $44,200. Tesla shares were up more than 2% Monday morning. In its SEC filing, Tesla warned investors of the volatility of bitcoin’s price.
Musk has gotten into trouble for his market moving tweets in the past, but it’s unclear how that applies to his tweets about cryptocurrencies. Most notably, the SEC charged Musk with fraud in 2018 for his tweets about taking the company private at $420 per share.
Musk ultimately settled with the SEC, and was forced to give up his role as chairman of the company’s board and pay a $20 million fine on top of another $20 million fine for the company itself.
Bitcoin chart analysis after tesla buys $1.5 billion and reaches $50k
Bitcoin (BTC/USD) has made yet another massive bullish breakout. Tesla announced its purchase of $1.5 billion worth of Bitcoin.
On the 1 hour chart, we can see that the impulsive push higher is probably a wave 3 (green) of wave 3 (orange). This means that the current pullback is a wave 4
A retracement is expected to take place (orange arrows) in wave 4 (orange) back to the support zone around $43-45k. The main targets after the $50k are $55k and $61k.
The bullish breakout delivered on the trading idea from last trading week. Let’s now discuss what to expect this and next week.
Price Charts and Technical Analysis:
The BTC/USD bullish breakout confirmed the uptrend continuation. The deeper pullbacks from last week indicate a wave 1-2 (pink/orange) pattern. The current strong push up is likely an impulsive wave 3 (orange).
But the main target for the short-term is $50,000 psychological round level. Although price action could easily break (green arrow) the smaller triangle pattern (purple lines), there is not much space before hitting that target.
A retracement is expected (orange arrows) after hitting the target. Then a bullish bounce should resume the uptrend again (blue arrow).
On the 1 hour chart, we can see that the impulsive push higher is probably a wave 3 (green) of wave 3 (orange). This means that the current pullback is a wave 4 (green) and the future breakout a wave 5 (green).
After that, a retracement is expected to take place (orange arrows) in wave 4 (orange) back to the support zone around $43-45k. The main targets after the $50k are $55k and $61k.
*The analysis has been done with the ecs.SWAT method and ebook.
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