Tesla’s Elon Musk has lost his spot as the richest man in the world. This development follows a decline in the price of Bitcoin and the shares of Tesla, his electric car company.
As the world’s biggest cryptocurrency plummeted as much as 17 percent on Tuesday, February 23, 2021, with prices fallen below $50,000, Tesla shares slid to $698, a development that came two weeks after the car company added no less than $1.5 billion in Bitcoin to its balance sheet.
In what appeared to be the greatest decline in Tesla’s value since last year’s September, about a whopping $3.56 billion was wiped out from Musk’s net worth. This is also after a plunge in the value of Bitcoin.
While Musk now ranks as the second richest man in the world with $180 billion, American industrialist Jeff Bezos is now the richest man with a total net worth of $187 billion. This is the second time the Amazon CEO is topping the billionaire’s list this month.
Musk’s Networth Drop? Blame it on Bitcoin
Dan Ives, a financial analyst with Wedbush, said while he believes Musk’s latest purchase of $1.5 billion worth of bitcoin is a strategic move, he would blame Tesla’s stock decline on the company’s association with Bitcoin.
“Investors are starting to tie Bitcoin and Tesla at the hip. While Tesla on paper made roughly a $1 billion on Bitcoin in a month that exceeded all its EV profits from 2020, the recent 48 hour sell off in Bitcoin and added volatility has driven some investors to the exits on this name in the near-term,” Fox Business quoted Ives as saying.
Further explaining his point of view in an interview with CNBC, Ives continued: “With Tesla diving into the deep end of the pool on bitcoin, Musk runs the risk that this sideshow can overshadow the fundamental EV (electric vehicle) vision in the near term for investors.”
However, in spite of popular opinions on Musk, the Wedbush analyst is optimistic that bitcoin is a “smart move at the right time for Tesla.”
Ives estimates that Tesla has already made a return of over $1 billion off its investment in Bitcoin. “On the downside, it’s playing with firecrackers and risks and volatility are added to the Tesla story,” Ives added.
Cathie Wood of Ark Invest, an investment management firm, likely supports Ives’ argument, owing to the fact that ARK’s ETF has been buying Tesla shares amid its recent decline. As seen on Ark’s daily trading log, Wood has purchased no less than 200,000 shares of Tesla.
Meanwhile, as of Wednesday, February 24, Bitcoin rallied back above $50,000, as the bulls returned back to the markets. The world’s largest cryptocurrency went up by as much as 5.4% to about $50,557, per data from Coinmarketcap.