Experts Explain What Bitcoin’s $936 Million Sell-Off By Tesla Means.

The transaction “should not be taken as a verdict on Bitcoin,” according to Tesla CEO, who added that the company is “certainly open to increasing our Bitcoin holdings in the future.” 

Experts in the cryptocurrency sector are generally unconcerned with Tesla’s intention to sell 75% of its Bitcoin (BTC) holdings, noting that this is a pretty common tactic used by businesses to increase cash flow amid downturns in the economy.

The manufacturer of electric vehicles disclosed on Wednesday that it had sold $75% of its Bitcoin holdings in the second quarter, adding $936 million in fiat to its bank sheet.

Elon Musk, the CEO of Tesla, said on a conference call that the sale “should not be taken as a verdict on Bitcoin,” adding that the decision was motivated by worries about liquidity in light of the ongoing 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.”

Musk responded that Bitcoin was a “sideshow to the sideshow” of Tesla’s primary objective, which is “to accelerate the advent of stable energy,” in response to a question from investors on the results call about whether he considered Bitcoin as a long-term asset.

Tesla likely sold up its Bitcoin because it was “seen as a distraction from their core business,” according to Markus Thielen, chief investment officer at Singapore-based digital asset manager IDEG.

“I would not be surprised if Tesla keeps nibbling in Bitcoin when Bitcoin stabilizes, otherwise they would have sold 100%.”

While the announcement caused a drop in the price of Bitcoin, Comparison site Finder’s share trading expert Kylie Purcell said that there are already indications of a rebound.

Following Tesla’s announcement on Wednesday, the price of Bitcoin dropped by about 2.6% before rising again to $23,299 at the time of writing, tracking near to its one-month high, indicating that the crypto community may not have been very alarmed by the news.

The transaction received a different response than when Telsa announced in February of last year that it had acquired $1.5 billion in Bitcoin to add to its balance sheet and planned to accept Bitcoin as payment for some items (though this was later scrapped).

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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