🍨 Daily Scoop: Tesla’s U-Turn on Bitcoin | Trade Stocks

Tesla’s U-Turn on Bitcoin

By Fri, May 14, 2021

Hey Scoopers,

After three losing sessions in a row, the markets found the strength to rebound and snap the losing streak as better-than-expected new jobless data was released. — More on that in the “Overall Market” section.

Beyond the overall market, a crypto bank witnessed its stock soaring after announcing a partnership with a social media company. Meanwhile, a Chinese e-commerce giant’s stock has underperformed due to uncertain future regulations. — More on that in the “What’s Up?” and “What’s Down?” sections.

By the way, you cannot purchase an electric vehicle with Bitcoin anymore. — More on that in the “Water Cooler” section.

But, first, here is a recap of what happened in the market yesterday:

Market Recap


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New Jobless Data to the Rescue

The stock market ended in the green zone on Thursday.

stronger-than-expected new jobless report inspired the markets to rebound after concerns about a higher-than-expected inflation rate dragged down the indices in the previous session. The number of Americans filing for unemployment benefits slid to 473,000 against the expected 490,000. It was the lowest weekly new jobless claims data in the pandemic era.


Facebook’s Crypto Issuer

So, what happened?

Shares of Silvergate Capital (Ticker: SI) were up by more than 13% on Thursday. The surge came after the crypto bank company announced a partnership with Facebook (Ticker: FB). Silvergate announced it would become Facebook’s Diem exclusive issuer. Diem is Facebook’s U.S. dollar-pegged stable coin, which was formerly known as the Libra project. According to Facebook, Silvergate has developed a unique real-time payment system that enables issuers to mint and burn coins at any time. It seems that the market approved of the partnership between the two companies.


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Growing Regulation

So what happened?

Shares of Alibaba (Ticker: BABA) were down by more than 6% on Thursday. Although the Chinese e-commerce giant reached some analysts’ estimates, investors’ sentiment turned bearish toward the company as it suffers from the impact of regulations in China. Despite delivering the expected results, the uncomfortable risk of the pending regulatory reviews is raising concerns.


Tesla’s U-Turn on Bitcoin

So what happened?

Elon Musk announced Tesla (Ticker: TSLAwould not accept Bitcoin as payment anymore.

After previously announcing that Bitcoin could be a payment method for its cars, Elon Musk’s Tesla decided to step back. According to Tesla’s CEO, the fundamental reason to step back was the “rapidly increasing use of fossil fuels for Bitcoin mining.” However, the company stated it would not sell its $1.5 billion worth of Bitcoin as it awaits the cryptocurrency to find more eco-friendly alternatives to operate. Furthermore, Musk said cryptos are an excellent idea, but they could not “come at great cost to the environment.” Tesla’s announcement was enough to drop Bitcoin’s price to $46K per coin from the $54K mark moments before the information came to the public.

Social media users responded to Elon’s tweet accusing Tesla of manipulating the cryptocurrency market.

It seems that although Elon Musk defended Bitcoin for a long time, the crypto fans didn’t like Tesla’s U-turn.

If you have any questions, or suggestions let us know by emailing us at members@tradestocks.com. We look forward to hearing from you.

About the Author

Felipe Nebesnyj is an Economics student who is passionate about the stock market and investing in the market. Originally from Brazil, he is working and studying in the U.S. and started learning about and researching the stock market at 16. Before joining Stock Card, Felipe worked on multiple stock market research projects that gave him the necessary knowledge and confidence to put into his stock market analyst career at Stock Card. Last but not least, he is an excellent violinist and enjoys video games.