Whales and Dead Cats

Tesla made a profit last quarter. However, it was not from selling cars. What brought them into the black were subsidies and sale of Bitcoin. That's interesting because Elon Musk made a stir when he announced that he had been buying Bitcoin back in early February. Subsidies received from US taxpayers had been directed into the purchase of hundreds of millions worth of Bitcoin, thereby making Tesla a Bitcoin whale. It's not clear how this can be seen as an environmentally friendly, but that's where a large portion of tax funded green subsidies went.

Also of interest is the fact that Tesla was a net seller of Bitcoin during the last quarter. It means that Bitcoin acquired before early February were sold into the latter part of the quarter. That was a period when Elon was tweeting how much he loves Bitcoin. From Elon's tweets, one would think he was accumulating Bitcoin. But he wasn't. He was selling them and his tweets were made to entice people into buying what he was selling.

With Bitcoin up around 100% from early February until the end of the quarter, Tesla made a killing. However, Bitcoin hasn't looked too healthy since its latest peak on April 14, which begs the question. What is Elon doing? He hasn't tweeted much about Bitcoin lately, so he might be accumulating, or he has sold Tesla's entire holding. Either way, we won't know any of this for sure before Elon either tweets something positive about Bitcoin, or he's forced to make his position public in next quarter report from Tesla.

None of this should come as a surprise. Elon is a salesman. He hustles government for subsidies, and he hustles the public for money, either through investments or sales. Anyone under the impression that Elon is some kind of visionary engineer is deluding themselves, and what we've seen this past quarter proves this beyond any doubt. Elon engineered a classic pump and dump, and he did so shamelessly in the knowledge that his followers would once again buy his products and services.

As for the latest spike up from recent lows in the Bitcoin price, it remains to be seen what comes of it. We're so used to Bitcoin falling by as much as 30%, only to take out new highs a few weeks later, that the latest price action has hardly received a mention. The general assumption is that this is merely one of so many pull backs, and that we'll see new highs in a few weeks. However, I wouldn't bet on it. There's something unconvincing about this latest up move. It looks like a dead cat bounce.

The problem for small investors is that we don't know what the whales are doing. Is Elon planning a new pump and dump, or is he selling Tesla's last Bitcoin? Only Elon knows. He's in charge of the game. Everyone else is merely placing bets in a rigged casino.

Elon Musk

By Duncan.Hull - Own work, CC BY-SA 4.0, Link