Cryptocurrency industry pundits are largely indifferent to Tesla’s decision to sell 75% of its bitcoin (BTC) holdings, saying it’s a fairly standard strategy for companies to save money and improve their cash flow in the event of an economic downturn.
On Wednesday, the electric vehicle maker revealed that it sold 75% of its bitcoin holdings in the second quarter, adding $936 million in fiat currency to its balance sheet.
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 in light of the COVID-19 outbreak. 19 in China.
“The reason we sold a lot of our bitcoin holdings was because we weren’t sure when the Covid lockdowns in China would ease. It was therefore important for us to maximize our cash position:”
“We are certainly open to increasing our bitcoin holdings in the future.”
When investors asked him on the earnings conference call if he sees bitcoin as a long-term asset, Musk replied that cryptocurrencies are “incidentally ancillary” to Tesla’s main focus, which is to “accelerate the arrival of stable energy.”
“Crypto-currencies are 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 because it was “considered to be distracting from its core business”.
“I wouldn’t be surprised if Tesla keeps snacking on bitcoin when it stabilizes, otherwise they would have sold 100%.”
Comparison Site Finder stock trading expert Kylie Purcell explained that the electric car maker is not the only one that has decided to “consolidate its capital in fiat currencies”.
“As the world heads towards an economic slowdown and possibly a recession, it is not unusual for investors and businesses to shift capital from more volatile assets to fiat currency,” she said.
She added that although 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 Tesla’s announcement and fell back to $23,299 at the time of writing, close to its 1-month high. , which means that the cryptocurrency community may not have been too concerned about this announcement.
Comparison Site Finder stock trading expert Kylie Purcell explained that the electric car maker is not the only one that has decided to “consolidate its capital in fiat currencies”.
“As the world heads towards an economic slowdown and possibly a recession, it is not unusual for investors and businesses to shift capital from more volatile assets to fiat currency,” she said.
She added that although 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 Tesla’s announcement and fell back to $23,299 at the time of writing, close to its 1-month high. , which means that the cryptocurrency community may not have been too concerned about this announcement.
So Tesla has already sold their inventory, apparently it did so mainly to maintain positive cash flow (non-bitcoin-centric reasons), and it still has 25% of its BTC.
Maybe I’m dealing with it but nothing like a burger.
— Will Clemente (@WClementeIII) July 20, 2022
Therefore Tesla has already sold its inventory, it seems that it did so mainly to maintain a positive cash flow (for non-bitcoin related reasons), and it still owns 25% of its BTC. Maybe I’m wrong, but it seems like nothing at all. — Will Clemente (@WClementeIII) July 20, 2022.
The low-key reaction to the sale differed from the announcement in February of last year that Telsa had acquired $1.5 billion in BTC to bolster its balance sheet and planned to accept bitcoins as payment. . .
The news then sent the price of bitcoin soaring by nearly $3,000, taking the cryptocurrency to a new all-time high of over $43,000.
Also read: The price of Bitcoin fell below $23,000 after an earnings report revealed that Tesla sold 75% of its BTC.
Swyftx’s head of strategic partnerships, Tommy Honan, told Cointelegraph that Tesla’s decision to buy bitcoin last year was “as big a moment as you can imagine for digital assets.
“It almost allowed other companies to put cryptocurrencies on their balance sheets and we saw a lot of large institutional investors, as well as small and medium-sized companies, flood the market from there. »
“Musk said the sell-off is not a verdict on bitcoin, but a money game, and it looks like the market took him at his word. The price of bitcoin has stabilized over the past 24 hours and we would be surprised if other large investors follow suit, especially given the current price of bitcoin.”
