The market reacts to Tesla selling 75% of their Bitcoin. The European Central Bank follows America’s hawkish approach to restore value in the euro. And Coinbase product manager gets locked up for insider trading. My name is Justin. This is your nightly crypto news wrap-up.
Let’s get it! There’s still this question of free cash flow that went back and forth a little bit ping pong last night on Twitter with some of the folks from Tesla’s investment team and others about the sale of Bitcoin. And what’d you think that was really about? They blamed it on the uncertainty about how long the China plant would be shut down.
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They said that because of that uncertainty, they wanted cash liquidity. But that doesn’t necessarily tell the story. I mean, we don’t know if they did it in order to realize a gain and boost that cash flow number. You know, at the end of the day, this is a very capital intensive business. Meaning that they have to invest a lot of their cash into the business just to be able to grow. And what that does is it eats up cash and the inability to return excess free cash flow to shareholders. So that is an odd move this quarter and blaming it on uncertainty around China to get that cash liquidity. Tesla strikes again. Just when we started gaining some momentum after breaking out of the bear flag we’ve been trading in since the last selloff in June, Tesla caused Bitcoin to do a U-turn to re-test the previous resistance level of around $22,400. Now, if we can hold that level and turn that resistance level into support, the bullish narrative will continue. If we lose that level, not a bad time to check your stop losses or even open a short. In Quarter 2 of this year, the electric car company offloaded 75% of their Bitcoin holdings adding $936 million into their balance sheet.
Now, although they sold at 9% loss, it was necessary for them to add liquidity to their account because of the money they lost from the Tesla Shanghai factory shutting down. On the plus side, at least the overall crypto market cap held strong above the trillion dollar mark and the Tesla selloff was for the liquidity and not for some sort of derogatory statement like Elon has made in the past. In the Tesla earnings call yesterday, at least Elon stated, “We are certainly open to increasing our Bitcoin holdings in the future, so this should not be taken as some sort of verdict on Bitcoin.” He also added that they haven’t sold any of their Dogecoin.
Well, thank God for that! Now, keep in mind, the Fed meeting is next week, so it is possible that they wanted to get out while Bitcoin was still in an uptrend. Musk did mention he is expecting inflation to go down by the end of the year. The question is, what will happen at the expense of the markets? Let’s pass it on to Frankie Candles for a market watch. Alright, guys. Let’s do a little market watch here. We’ve got Bitcoin coming in at $23,157. Down about 0.5% for the day but still up 12.5% on the week Ethereum coming in at $1,576 So close to that $1,600 level Up about 3.5% on the day and up 32% on the week Absolutely crushing it for Ethereum.
Now, I want to bring you guys over to the charts real quick because we do have the VWAP crossing over the zero line to the upside on the 4-hour chart confirming in about 4 minutes. Now, this could bring us up short-term. But I want to bring you over to the daily timeframe where we have the VWAP crossing below the zero line looking to print that red dot on top of the momentum wave indicating that we could take a little bit of a dip here when that happens. Now, it’s not printing just yet, but it is looking like it’s going to happen very soon. Money flow coming up though, so that is a good sign. So when that red dot prints on Market Cipher B on that daily chart, expect a decent pullback as it is likely to happen.
It turns out that we’re not the only ones increasing interest rates to restore the value of our currency. Just last week, the euro temporarily dipped below the dollar for the first time in two decades. In response to their own inflation, the European Central Bank had no choice but to raise their interest rates for the first time in 11 years. The EU is responsible for banking 19 countries, and they prided themselves for being a zero-interest rate environment for the past six years. Inflation is like a sprained ankle. It ain’t nothing to play with. And that sentiment is the reason the dollar caught up to the euro over time. You can’t blame them for trying an unorthodox approach. But now the 50-basis-point-hike hit them harder than expected since analysts only expected a 25-point-hike. In response to the hike, the ECB stated, “The Government Council judged that it is appropriate to take a larger first step on its policy rate normalization path than signaled at its previous meeting.”
It goes to show that the US isn’t alone on the hawkish approach against inflation. But for the EU, let’s hope this works out for them in a time of global uncertainty. A former Coinbase product manager Ishan Wahi was arrested this morning for wire fraud conspiracy in connection to insider trading. Unbelievable! Ishan is obviously a former employee now, but this scheme went on from June 2021 all the way to April of this year. Great job, everyone, paying attention. Long story short, Ishan Wahi was in charge of Coinbase’s public listings, and, of course, that information is top secret and confidential. Since he knew what coins Coinbase were set to list and when they would be listed, he tipped off his brother Nikhil Wahi and his friend Sameer Ramani ahead of time so they could buy them big before the announcement went public. They traded ahead of 14 public listings involving 25 different assets. I can’t believe they thought that they could get away with this. And this is an unbelievably bad look for Coinbase, especially after all the insolvency FUD they dealt with last week. Ishan and Nikhil were arrested this morning by the FBI in Seattle, Washington.
Ramani is still at large after siphoning $1.1 million out of this elaborate insider tipping scheme. Ishan is being charged with two counts of wire fraud conspiracy and two counts of wire fraud. And each of those charges carries a maximum sentence of 20 years. Now, I hope this trio spends every day of those sentences behind bars because they stole from the retail investors. They stole from you, the BitSquad. Coinbase has a lot of explaining to do. And this is just another dent in their reputation that they won’t be able to fix. All I have to say is that integrity goes a long way.
This article is a transcription of a video made by BitBoy Crypto
Original video: https://youtu.be/XXoEvtr4X00
