Bitcoin: Elon Musk loses world’s richest title as Tesla falters

Tesla boss Elon Musk has lost his title as the world’s richest person after a recent slide in the electric carmaker’s shares, the main driver of his wealth.

Tesla shares have tumbled more than 20% since hitting a high of more than $880 in early January.

The fall comes as the firm has been hit with criticism from Chinese regulators and revealed a risky $1.5bn (£1bn) investment in Bitcoin.

The value of the cryptocurrency jumped nearly 50% after the disclosure.

But since rising above $57,000 on Sunday, Bitcoin has dropped nearly 20%. It was trading at less than $48,000 on Tuesday.

While that might not have hurt Tesla – Bitcoin is still worth more than it was when the firm disclosed its bet – the risks associated with the volatile cryptocurrency could have prompted some investors to sell, Wedbush Securities analyst Dan Ives said.

Tesla charging points at a Shanghai mall

“By Musk and Tesla aggressively embracing Bitcoin… investors are starting to tie Bitcoin and Tesla at the hip,” he said.

“The recent 48-hour sell-off in Bitcoin and added volatility has driven some investors to the exits on this name in the near-term.”

What is causing the Bitcoin sell-off?

Mr Musk was credited with helping to fuel Bitcoin’s rise, when Tesla revealed it had purchased $1.5bn of the currency and planned to accept it as payment. Now he may have himself to blame for some of the recent Bitcoin declines. 

In an exchange on Twitter over the weekend Mr Musk wrote that the price of Bitcoin did “seem high lol”.

Also driving Bitcoin lower were comments from US Treasury Secretary Janet Yellen, who sounded a warning on Bitcoin on Monday. She called it an “extremely inefficient way of conducting transactions”.

The comments follow a recent surge of interest in Bitcoin, after major US firms such as Mastercard and Bank of NY Mellon followed Tesla’s lead in announcing plans to incorporate the digital currency into their operations.

What else is affecting Tesla?

Mr Musk’s attention to Bitcoin comes as Tesla faces other challenges. 

The firm recently halted most sales of the lowest-priced version of its Model Y SUV, with Mr Musk citing a desire to improve the car’s range.

Earlier this month, Chinese regulators summoned the firm over safety and quality issues, stemming from reports of battery fires and abnormal acceleration.

Five Chinese regulators have recently summoned Tesla over quality and safety issues.
image captionChina is Tesla’s biggest source of sales after the United States

Rival carmakers such as General Motors and Volkswagen have also stepped up their focus on electric vehicles in recent months.

Shares in the electric carmaker Tesla are currently the biggest source of Mr Musk’s wealth. Their rapid rise first propelled him past Amazon boss Jeff Bezos in the world’s richest ranking in January, with the two billionaires vying for the top spot in the weeks since. 

Monday’s decline in share price was the biggest fall seen since September and wiped more than $15bn off Mr Musk’s net worth, according to Bloomberg.

Mr Musk’s tweets have also famously triggered sharp moves in Tesla shares, including last summer when the firm lost $14bn in market value after he wrote that its share price was too high.

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