Crypto: El Salvador, Tesla face losses from bitcoin bets

Yahoo Finance’s Jared Blikre, Brian Cheung, and Akiko Fujita discuss how bitcoin investors are faring amid the cryptocurrency's recent declines.

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- We've got Jared here. Bitcoin crashes caused pain not only for businesses, but countries as well, with the recent crash costing the El Salvador government around $40 million. Jared Blikre is on top of that. And there's this headline today coming out of El Salvador.

There are 44 countries-- those from the central bank, other official leaders out of developing countries too-- who are meeting in El Salvador today to discuss bitcoin. But the question is, of course, is this a sign that this is why a country doesn't go all in?

- Well, yeah, El Salvador is the first. They made a bunch of splashy headlines. And I follow the president on Twitter. I think he's a bold guy. But when you're a first mover, it doesn't always work out. So they're down about $40 million or so. Tesla-- they have a big balance sheet with bitcoin on it. They were down about $27 million in the first quarter. But they've also punted. Elon Musk sold crypto early on after he bought that bitcoin, made about $130 million.

The point is, with all the bitcoin volatility that we've seen recently, is it going to be a de facto standard among countries? I think the fact that they were able to issue cryptocurrency-- I think they gave everybody in the country $30, and only 20% used it. So there's not this widespread adoption. You look at the volatility of bitcoin, and it's very understandable to see why that would be still in its infancy.

This is an asset class that is still fledgling, still in its growing phases, and we're having growing pains here. So let me do this. I'm going to go to the YFi Interactive because I actually have a handheld here that I use at the New York Stock Exchange. So I know this is a little tricky here.

We have finally taken out these lows that we had last year, but it could be a false breakdown. And we know that bitcoin is famous for these false breakdowns and also false break-ups. Because if we go to a two-year basis, those highs that we got last year, those record highs, those were only new nominal highs. That faked a lot of people out. So basically, we have been trading in a range for about a year and a half in bitcoin. We are now at the lower end of this range.

So this is where the rubber meets the road. I've been calling out some big levels here. $20,000 is a huge support level. If we break through these, probably going to hit $20,000 pretty quickly. $13,000 is another level. And this is going to cause a lot of pain for people. But as I've been saying since a year ago when I thought we were going to break down from the $27,000, $28,000 level, I think that Wall Street wants to accumulate crypto at lower prices. And that would basically enable them to do that.

- Well, you bring up a good point about institutions looking at the fall in bitcoin prices right now. It might be tempting for them to buy the dip. But at the same time, Michael Saylor from MicroStrategy was speaking to the 9:00 to 11:00 AM show just this morning, and his point was that we buy crypto when we have cash. We don't buy crypto just because it's cheap. Now, you would like to hit both of those things at the same time-- when you have cash and when it's cheap.

So I guess that raises the question-- when people are looking at bitcoin prices and they see it under sub-$30,000, that's not necessarily automatic green light for institutions like Tesla or other companies or sovereign nations to just want to start beefing up reserves, right?

- Well, that's it. And nobody exactly knows exactly when the dip is going to come or how deep it's going to be. But if your strategy is to accumulate bitcoin over the long term, I think bitcoin, and also crypto as an asset class in general, attracts the hodler mentality-- that is, people who want to buy and hold-- as opposed to people who are just trying to flip it for a quick profit.

Now, those people are in the market. You take a look at what happened last week in Luna, in Terra, like you were just talking about. That was a takedown. There was a structural failure in the market that people were able to capitalize on. Somebody or a lot of people made a lot of money, and a lot of people lost money. That is the nature of the business.

But I think we have bitcoin here. We have Ethereum. Is it going to be Solana? Are there going to be alternatives? I don't know, but I stick with the main staples here. I think they're going higher in the long term. But we got to flush out some of this weakness here in the short term.

- Well, and you also have to wonder how much of the declines that we saw last week or over the last few weeks came from institutional investors exiting their position. And there's a lot of people who are saying, look, the argument before was about stability with bitcoin coming from more institutional investors. Be careful what you look for or what you hope for, because at some point when it is risk off, it's not just on the equity side but on the crypto side.

- It's not so clear who did the Luna attack.

- No, it's not clear at all. And I think that was a monkey in the wrench. Let's go back to the YFi Interactive because I want to show this longer-term chart that we have here. Here's a two-year chart. When we were at $40,000-- so this was a couple of weeks ago-- when we were at $40,000, there was a lot more negative sentiment in the market than there was when we were at $28,000 at these lows. So the market should have had the capability to lift off from there. When it doesn't, that tells you something. Luna Terra was unexpected, and that was the fly in the ointment.

So if it's a one-off, the market should be able to recover from here. If there are deeper structural issues besides Luna and Terra, well, probably going to see much lower prices. And that's how it shakes out.

- Look at this guy. When we pull them away from the YFi Interactive--

- I can't get away from it.

- He's still using the YFi Interactive somehow?

- He saw your Interactive and said, I'm going to one up--

- I got so nervous doing the Interactive in front of Jared. I was like--

- And he could control it right here.

- I had to do Yahoo U one time. I was a little bit nervous.

- Touche.

- Big shoes to fill there, Brian.

- All right. I feel like I'm just kind of in the middle.

- You're good too, Akiko.

- [LAUGHS] Well, I wasn't exactly--

- Use the Interactive when you want. You're allowed. [LAUGHS]

- By, the way, by the way, you talked about buying the dip. Nayib Bukele, who's the president of El Salvador, last week right, went in and bought the dip.

- He did. Quite a bit underwater, but--

- No surprise there, but we'll see how that shakes down for that country. Coming up--