- Had Tesla invested in Dogecoin (DOGE) instead of Bitcoin (BTC) in 2021, the value of its holdings might have differed dramatically.
- Elon Musk’s favorite memecoin, Dogecoin, surged 66.57% in price, while Bitcoin dipped by 19.29% as of September 21, 2023.
A Dive into the Hypothetical
In 2021, Elon Musk, the powerhouse behind Tesla Inc., made waves in the cryptocurrency sphere by investing a whopping $1.5 billion in Bitcoin. This was documented in an official SEC filing, which disclosed the acquisition of approximately 43,860 BTC at an average cost of $34,200 per coin. Fast forward to today, those assets, with Bitcoin’s value standing at $26,800, signify a 21% unrealized loss, equating to a value of around $1.17 billion.
Despite the initial promise, the bear market left its mark. By the second quarter of 2022, Tesla, possibly influenced by market conditions, sold off 75% of its Bitcoin holdings. This resulted in the liquidation of an estimated 33,135 BTC, each at an average price of $28,248. Consequently, this strategic move led to a 17.4% realized loss from the original investment.
Now, let’s paint a different picture. Imagine if Tesla had directed its monetary strength towards Elon Musk’s openly favored cryptocurrency, Dogecoin. An intriguing comparison reveals that, in the timeframe where Bitcoin’s value decreased by 19.29%, Dogecoin soared by an impressive 66.57%.
In this alternative scenario, should Tesla have decided on a similar Q2 2022 selloff strategy with Dogecoin as they did with Bitcoin, the company might have seen realized gains soaring between 100% to 200%. This would translate to a hypothetical value of around $2.8 billion from the initial $1.5 billion investment. Additionally, the residual 25% of Tesla’s holdings would now be worth an estimated $620 million in DOGE, substantially higher than the $287.43 million in BTC in the actual scenario.
However, it’s crucial to factor in the nuances this hypothetical overlooks. The crypto market’s liquidity and Dogecoin‘s availability in 2021 could have posed challenges. A hefty purchase like Tesla’s might have propelled Dogecoin’s price to unforeseen heights merely due to the massive demand influx.
This speculative exercise, while captivating, underscores the dynamic and unpredictable nature of the cryptocurrency world. Always evolving, always surprising.