Experts reveal what Tesla’s $936M sell-off means for Bitcoin

Experts in the crypto industry are not at all concerned by Tesla’s decision of selling 75% off its Bitcoin (BTC), saying that it is a common strategy for companies to increase cash flow during economic slowdowns.

The electric vehicle manufacturer announced Wednesday that it had sold 75% its Bitcoin holdings during Q2, adding $936 Million in fiat to its balance sheets.

Elon Musk, Tesla CEO, stated that the sale of Bitcoin should not be taken as a verdict against Bitcoin. He explained that the move was due liquidity concerns given China’s ongoing Covid lockdowns.

We sold Bitcoin holdings because we weren’t sure when the Covid lockdowns would end in China. We wanted to maximize our cash position.

“We are open to expanding our Bitcoin holdings in future.”

When asked by investors if he considered Bitcoin a long-term investment, Musk replied that the cryptocurrency was “a sideshow to the sideshow of Tesla’s main goal which is to accelerate the advent stable energy.”

He said, “Cryptocurrency does not come to our minds often.”

Markus Thielen is the chief investment officer of IDEG, a digital asset manager based in Singapore. He told Cointelegraph that Tesla sold its Bitcoin because it was “seen to be a distraction from their core businesses.”

“I wouldn’t be surprised if Tesla continues to nibble in Bitcoin when Bitcoin stabilizes. Otherwise, they would have sold 100%.”

Kylie Purcell, a share trading expert at Comparison Site Finder, explained that the decision by the electric car manufacturer to “shore up capital with cash currencies” wasn’t made alone.

She noted that “with the world facing an economic slowdown, and possibly a recession,” it is not uncommon for companies and investors to shift capital away from volatile assets and into fiat currencies.

She added that although Bitcoin’s price fell after the announcement, there were already signs of recovery.

Bitcoin’s price dropped 2.6% on Wednesday following Tesla’s announcement. It is now at $23,299 as of this writing. This is close to the one-month high. The announcement may have not been too alarming for the crypto community.

Tesla appears to have already sold their inventory. However, this was primarily done to maintain positive cash flow (non-bidirectional reasons). They still hold 25% of their BTC. Perhaps I’m just trying to cope, but it seems like nothing.
— Will Clemente (@WClementeIII), July 20, 2022

The muted response to the sale was different to the February announcement that Telsa had raised $1.5 billion in BTC to improve its balance sheet. It was also planning to accept Bitcoin payments for certain products, though this plan was scrapped later.

According to the tim, Bitcoin’s price jumped by nearly $3,000 immediately. This brought the cryptocurrency above $43,000 for the first time.

Related: Bitcoin price drops below $23K after Tesla’s earnings report revealed that 75% of its BTC was sold

Tommy Honan, Swyftx’s head for strategic partnerships, told Cointelegraph that Tesla buying Bitcoin last year was “as significant a moment as any you can imagine” for digital assets.

“It almost allowed other businesses to put crypto on the balance sheets. We saw a lot more big institutional investors as well as small- and mid-cap firms flood into this market from that point.”

Musk stated that the sale was not a verdict on Bitcoin but a cash play and it seems like the market has accepted his word. Bitcoin’s price stabilized in the last 24 hours. We’d be surprised to see other large investors follow suit, given the current Bitcoin price.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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