On Wednesday, the electric vehicle maker revealed it had sold 75% of its Bitcoin holdings in the second quarter, adding $936 million in fiat to its balance sheet. During a conference call, Tesla CEO Elon Musk noted that the sale “should not be seen as a verdict on Bitcoin,” explaining that the move was due to liquidity concerns given the ongoing Covid lockdown in China. “The reason we sold a bunch of our Bitcoin holdings was that we were uncertain about when the Covid lockdowns in China would ease. So it was important for us to maximize our cash position.” “We are definitely open to increasing Bitcoin reserves in the future.” Asked by investors during the earnings call if he sees Bitcoin as a long-term asset, Musk said the cryptocurrency was a “sideshow” to Tesla’s main goal, which is to “accelerate the advent of sustainable energy.” “Cryptocurrency is not something we think about much,” he said. Markus Thielen, chief investment officer at Singapore-based digital asset manager IDEG, told Cointelegraph that Tesla likely sold its Bitcoin as it was “seen as a distraction from their core business.” “I wouldn’t be surprised if Tesla continues to pinch Bitcoin when Bitcoin stabilizes, otherwise they would have sold 100%. Kylie Purcell, equity trading specialist at comparison site Finder, explained that the electric car maker was not alone in its decision to “deposit capital into cash coins”. “With the world heading for an economic slowdown and possibly a recession, it is not unusual for investors and companies to move funds away from more volatile assets into fiat currencies,” he noted. He also added that while the price of Bitcoin fell after the announcement, there are already signs of recovery. On Wednesday, the price of Bitcoin fell about 2.6% after the Tesla announcement and returned to $23,299 at the time of writing — tracking near a one-month high, which means the crypto community may not have worried much from the announcement. So Tesla has already sold off their stock, it seems they did it mostly to maintain positive cash flow (reasons not focused on bitcoin) and they still have 25% of their BTC. Maybe I’m succeeding but it looks like nothing burger to me. — Will Clemente (@WClementeIII) July 20, 2022 The muted reaction to the sale came in contrast to the announcement in February of last year that Telsa had raised $1.5 billion in BTC to add to its balance sheet and planned to accept Bitcoin as payment for some products (although this was later withdrawn). . The news at the time saw the price of Bitcoin immediately jump by nearly $3,000, bringing the cryptocurrency to a new all-time high above $43,000. Swyftx head of strategic partnerships Tommy Honan told Cointelegraph that Tesla’s decision to buy Bitcoin last year was “as important a moment as you can imagine for digital assets.” “It pretty much gave other businesses permission to put crypto on their balance sheets, and we saw a lot of large institutional investors as well as small and mid-caps flood into the market from that point.” “Musk said the sale was not a verdict on Bitcoin, just a cash play, and it seems the market bought him. The price of Bitcoin has stabilized over the past 24 hours and we would be surprised if other large investors followed suit, especially given the current price of Bitcoin.”
