Telsa CEO noted that the sale “should not be taken as a verdict on Bitcoin” and is “certainly open to increasing our Bitcoin holdings in the future.”
Crypto industry experts are largely unfazed by Tesla’s decision to sell 75% of its Bitcoin (BTC) holdings, saying it’s a fairly typical strategy for companies to improve cash flow during economic slowdowns.
On Wednesday, the electric vehicle manufacturer revealed that it had sold 75% of its Bitcoin holdings in Q2, adding $936 million in fiat to its balance sheet.
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During a conference call, Tesla CEO Elon Musk noted that the sale “should not be taken as a verdict on Bitcoin,” explaining that the move was due to liquidity concerns given the continued Covid lockdowns in China.
“The reason we sold a bunch of our Bitcoin holdings was that we were uncertain as to when the Covid lockdowns in China would alleviate. So it was important for us to maximize our cash position.”
“We are certainly open to increasing our Bitcoin holdings in the future.” Asked by investors during the earnings call whether he saw Bitcoin as a long-term asset.
Musk said the cryptocurrency was a “sideshow to the sideshow” of Tesla’s main goal, which is “to accelerate the advent of stable energy.”“Cryptocurrency is not something we think of a lot,” he said.
Markus Thielen, chief investment officer at Singapore-based digital asset manager IDEG told Cointelegraph that Tesla likely sold off its Bitcoin as it was “seen as a distraction from their core business.”
“I would not be surprised if Tesla keeps nibbling in Bitcoin when Bitcoin stabilizes, otherwise they would have sold 100%.”Comparison site Finder’s share trading expert Kylie Purcell explained that the electric car manufacturer hasn’t been alone in its decision to “shore up capital in cash currencies.”
“With the world heading into an economic slowdown and possibly a recession, it’s not unusual for investors and companies to move capital away from more volatile assets into fiat currency,” she noted.She also added that while the price of Bitcoin dipped following the announcement, there are already signs of recovery.
On Wednesday, Bitcoin’s price fell approximately 2.6% following Tesla’s announcement and has returned to $23,299 at the time of writing tracking close to its one-month high, meaning that the crypto community may not have been too concerned by the announcement.
The muted reaction to the sale played out differently to the announcement in February last year that Telsa had scooped up $1.5 billion in BTC to add to its balance sheet and was planning on accepting Bitcoin as payment for certain products.
The news at the tim saw Bitcoin’s price immediately jump by almost $3,000, bringing the cryptocurrency to a new all-time high above $43,000.Swyftx’s 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.”
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“It almost gave other businesses permission to put crypto on their balance sheets and we saw a lot of big institutional investors, as well as small and mid-cap companies flood into the market from that point.”
“Musk said the sale wasn’t a verdict on Bitcoin, just a cash play, and it looks like the market has taken him at his word. Bitcoin’s price has stabilized over the last 24 hours and we’d be surprised if other big investors followed suit, especially given the current price of Bitcoin.” - cointelegraph