“Diamond Hands” is a popular meme by the “WallStreetBets” Reddit forum in reference to investors who believe that their investments will be eventually profitable and keep them holding even if the asset price drops.
On Wednesday, May 19, Bitcoin (BTC) price plunged all the way down to $30,000 in one of the biggest crashes in market history. There was major mayhem in the crypto space as major investors started liquidating their holdings. However, for a change of heart, Elon Musk can to the rescue. In a short tweet, Elon Musk wrote that Tesla has ‘Diamond Hands’. Meaning, Tesla Inc (NASDAQ: TSLA) continues to strongly hold in stake instead of liquidating.
Credit to our Master of Coin
— Elon Musk (@elonmusk) May 19, 2021
‘Diamond Hands’ of Tesla
Was this some sort of damage control since BTC price plunged way below Tesla’s entry point. Only Elon Musk can explain it. Interestingly, Elon Musk and Tesla have one of the major reasons behind this Bitcoin price crash. Last week, Tesla dropped accepting Bitcoin (BTC) payments citing environmental concerns. This pushed Bitcoin under its first major support of $50,000.
Over the last weekend, Musk doubled down on his bitcoin criticism calling it “highly centralized” by the miner community. He sparked further controversy suggesting that Tesla might as well sell all its Bitcoin holdings. Well, this was enough for investors to rush and liquidate their holdings faster.
Besides, China introducing a ban on banks and financial institutions from involving in any crypto-related activity also played a major role in Wednesday’s price correction. Bitcoin (BTC) has managed to make a quick recovery from the Wednesday lows. At press time, Bitcoin is trading at a price of $39,442 with a market cap of $746 billion.
Crypto-Related Stocks Take a Dive
Not only Bitcoin (BTC) but other crypto-related stocks also corrected on Wednesday. Stocks like Tesla Inc (NASDAQ: TSLA) and Coinbase Global Inc (NASDAQ: COIN) corrected during Wednesday’s trading session.
The COIN stock plunged nearly 6% closing at $224 with a market cap of $46.91 billion. The COIN stock has corrected nearly 33% since its listing on April 14. Coinbase’s public listing took place just at a time went the BTC price was trading above $60,000. Edward Moya, senior market analyst at OANDA told CNBC:
“Coinbase’s trading debut coincides with the top for Bitcoin and many traders can’t make a convincing argument that it will be able to recover all those losses since then”.
MicroStrategy Inc (NASDAQ: MSTR) that holds massive quantities of Bitcoins was also down by 7%. However, just a day before the market plunge, MicroStrategy announced purchasing another $10 million worth of Bitcoins.
“You had a confluence of events… where you started breaking down the positivity in the price action, and now we’ve got a liquidation event. The market will consolidate. It will find a bottom somewhere. I’m hoping its close to here,” said Galaxy Digital CEO Mike Novogratz, speaking about the recent market crash.