Bitcoin price sold off below $37,000 shortly as Amazon denied BTC accept, Tesla reported $23 million loss, didn’t conduct new BTC purchases
As AZCoin News reported, Bitcoin price briefly traded nearly $40,000 as Amazon ready to accept BTC payments by the end of 2021. But as soon as Amazon flatly denied the news, the price of BTC dropped immediately. At press time, Bitcoin price drops to $37,000 after topping above $40,500, but has recovered a little.
Bitcoin price spiked to $40,581 before pulling back to below $37,000
Bitcoin at some points surged past $40,000 for the first time since June. Why is this happening? Could it be Elon Musk and the anticipation of Tesla earnings, or whispers of Amazon warming up to Bitcoin? That may all be playing some role. Because when E-commerce giant Amazon denied a recent report published by British newspaper City A.M. about its plan to accept Bitcoin as early as this year, BTC doesn’t seem to be doing very well.
Bitcoin tumbled more than 7.5% shortly after Amazon commented on the fake news report.
BTC/USD 1-hour chart | Source: TradingView
Before this news appeared, Bitcoin jumped back above $40,400 for the first time since June 15th, as the number of unique addresses interacting on BTC’s network hit a 3-week high of their own.
What’s more, it wasn’t the worst news of the day. Bitcoin’s massive correction in Q2 made Tesla report a $23 million impairment loss.
The Elon Musk’ firm July 26 earnings report showed that total revenue grew by 98% year on year (YOY) for Q2, increasing from $6 billion in 2020 to $11.9 billion this year. Tesla stated:
“In the second quarter of 2021, we broke new and notable records. We produced and delivered over 200,000 vehicles, achieved an operating margin of 11.0%, and exceeded $1B of GAAP net income for the first time in our history.”
Besides, Tesla said that total revenue was partially offset by growth in operating expenses and a Bitcoin-related impairment loss of $23 million.
As AZCoin News reported, Tesla invested $1.5 billion into Bitcoin in early 2021. CNBC’s Katy Rooney said, the company was expected to book the loss due to accounting rules:
“Tesla holds crypto as an ‘intangible asset,’ and because of accounting rules, when Bitcoin’s value drops below a certain amount, companies have to mark that down in their financial statements.”
But, the impairment is not as high as some analysts expected.
Tesla records a $23M #bitcoin-related impairment charge in Q2
(Companies get hit with these accounting charges if value of crypto falls below the price where they bought)
Not nearly as high as some expected.. was hearing estimates as high as $100M loss as btc fell below 30k 👀 pic.twitter.com/nnQ32zNkdw
— Kate Rooney (@Kr00ney) July 26, 2021
Then, in April, the company sold $101 million worth of Bitcoins to test the liquidity of the cryptocurrency. However, Tesla has not sold any more BTC and now has $1.3 billion in Bitcoin on its balance sheet.
The loss today is really big. Perhaps as Musk said, “If the price of Bitcoin goes down, I lose money”. However, Tesla does not view Bitcoin as a market-based asset. That is, they only recognize the profit earned if sold. Therefore, the drop in the value of Bitcoin will not affect earnings as long as Tesla has not divested any of its holdings.
The drop in BTC also affects the altcoin market as a matter of course. The drop in BTC also affects the altcoin market as a matter of course. The top 10 coins with the highest capitalization on CoinMarketCap that recorded a 7% drop on the day were Ethereum and Binance Coin (BNB). ETH is currently trading around $2,171, still holding a high above $2,000. BNB is changing hands at $300, likely to drop to $290 any moment.
The overall cryptocurrency market cap now stands at $1.45 trillion, 5% decrease in the last 24 hours. Meanwhile, Bitcoin Dominance is 47.8%.
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