Bitcoin’s declines cause “Tesla”, “Microstrategy” and “Block” to lose 5 billion dollars
The acquisition of Bitcoin by “Tesla,” “Microstrategy,” and “Block” in the second quarter of this year
resulted in a paper loss estimated at $ 5 billion
a significant blow to some of the top firms in the world.
This is because the price of the digital currency fell by 59 percent.
These losses happened because certain businesses relied on holding assets like
short-term treasury bonds and cryptocurrencies,
which the three companies did and held,
to store some liquidity.
Contrary to Tesla,
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“ JP Morgan “ forecasts a 75% US recession.
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which decided to sell up the majority of its cryptocurrency holdings in the second quarter
and thus saw a fall in its profitability, Bitcoin, “Microstrategy,”
and “Block” still fully possess their respective portions of the encrypted currency.
The three companies were exposed to additional losses as a result of high inflation,
the increase in interest rates and expectations of a recession, as the share price of “Tesla” fell by 30% during the current year,
and “Microstrategy” and “Block” companies lost nearly half of their value.
Early in 2021, Tesla invested the equivalent of $1.5 billion in bitcoin,
which it immediately sold off, with 75% of its investors unsure of
when the COVID-related closures in China will end. Elon Musk argued at the time in Shanghai
that cryptocurrencies are beneficial and a method to win over conventional financiers.
On March 31, 2022, “Block” also bought $366 million’s worth of Bitcoin,
according to information provided by the business. Having cryptocurrencies
“ JP Morgan “ forecasts a 75% US recession.
Although “Bob Michel,” a bond market expert,
believes that the market is prepared for this situation and that the rate of a recession
in the United States of America may reach 75% within the next eighteen months,
he also stressed that clients are returning in their investments to the market for bonds,
particularly corporate bonds, as a result of their restored faith in central banks.
At the present time, central banks around the world are seeking to raise interest rates
aggressively in an attempt to confront the rising and stubborn inflation
and try to avoid the possible code in economies, and earlier last week
the European Central decided to raise interest rates,
and in a survey study conducted by “Bloomberg” for more than 44 economists.
In the period between July 15-20, the US Federal Reserve is expected to raise 75 basis points again next week,
and 50 basis points in September of this year.
A decline in stock market value
The stock market crashed on Friday due to fears of a recession,
as well as the slowdown in the bond market and the worsening of many activities across the world in July.
During the previous week,
the markets finished better and decreased the decline that occurred during the current year by 17 percent.
The second quarter of the year’s profits showed ongoing inflation,
as “Irene Brown” predicted, but what’s new is the appearance of high financing expenses now.
Try to slow down consumption
Michel stated that the European Central Bank is striving to slow down consumption,
while enabling it to raise very high rates, perhaps to 1.5% and 1.75%,
at a time when he sees the continued rise of the dollar after its recent decline last week
and affirmed its guardianship over Germany and ignored it in The current situation is in Italy and it is not necessary