In brief
- Elon Musk's net worth is indirectly linked to the price of Bitcoin because Tesla owns a lot of BTC.
- The Tesla CEO has been downgraded to the world's second-richest person as Tesla stock prices have slid.
With Bitcoin in the midst of a major market correction, billionaire Elon Musk has seen his top spot on the list of world’s richest people revised downward.
After briefly nabbing the top spot on the Bloomberg Billionaires Index of the world’s richest people in January, the Tesla CEO today was overtaken by Amazon founder Jeff Bezos.
Musk, now worth a mere $183 billion to Bezos's $186 billion, can blame Bitcoin.
The South Africa-born businessman is the largest stakeholder in the electric car company he runs, controlling an estimated 241 million shares, according to Barron’s. Tesla stock prices have been in ludicrous mode since the fall, zooming up from a price of $408 on November 16 to a high of $883 on January 26.
But then Tesla bought $1.5 billion in Bitcoin. Since the purchase was revealed on February 8, share prices have dropped $863 to $709. That equates to about $36 billion less that Musk personally can count toward his net worth.
Tesla’s BTC buy has been a boon for the price of the cryptocurrency, however. On the morning of February 8, the price of BTC was $39,000; in the following two weeks, it ticked all the way up to an all-time high of $58,000. The price bump netted Tesla an estimated $1 billion+ in profit, according to analysis from investment firm Wedbush Securities.
Or it would have if Tesla had cashed out yesterday. Bitcoin has shed $10,000 off its price tag in the last 24 hours. In the process, it’s taken some of the luster off Tesla’s purchase.
Despite the lack of correlation between Tesla and Bitcoin price movements to date, Wedbush analyst Dan Ives said in a note today that Tesla’s stock price is “heavily tied” to Bitcoin—or, at least, will be moving forward. Nonetheless, his feeling, per an interview yesterday with Yahoo Finance, is that Bitcoin isn’t yet fully “being factored into the price.”
If and when that does happen, we may very well see the volatile Musk moving all over the list of richest people, his company’s fortune tied to an even more volatile currency.