Crypto Industry Experts Not Too Concerned by Tesla’s Decision to Sell 75% of Its Bitcoin (BTC) shares, suggesting that it is a very common strategy for companies to improve cash flow during economic downturns.
On Wednesday, the electric automaker revealed that it sold 75% of its bitcoin stake in Q2, adding $936 million in fiat to its balance sheet.
During a conference call, Tesla CEO Elon Musk noted that the sale “shouldn’t be taken as a judgment on Bitcoin,” explaining that the move was due to liquidity given the ongoing Covid lockdowns in China.
“The reason we sold our Bitcoin holdings was because we were uncertain when the Covid lockdowns in China would ease. So it was important for us to increase our cash position.
“We are definitely ready to increase 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 Tesla’s main goal,” which is to “accelerate the advent of sustainable energy.”
“Cryptocurrency is not something we think about much,” he said.
Marcus Thielen, chief investment officer at Singapore-based digital asset manager IDEG, told Cointelegraph that Tesla may have sold its bitcoin because it was “perceived as a distraction from their core business.”
“I wouldn’t be surprised if Tesla is holding on to Bitcoin when Bitcoin stabilizes, otherwise they would have sold 100%.”
Kylie Purcell, stock trading expert at comparison site Finder, explained that the electric car maker was not alone in its decision to “raise capital in cash”.
“With the world heading into an economic recession and a recession, it’s not uncommon for investors and companies to move capital from highly volatile assets into fiat currency,” he noted.
He added that although bitcoin prices fell following the announcement, there are already signs of recovery.
On Wednesday, the price of Bitcoin fell by around 2.6% following Tesla’s announcement and has returned to $23,299 at the time of writing – tracking its one-month high, which means the crypto community may not be too worried about the announcement.
So Tesla has already sold their inventory, apparently doing so mainly to maintain positive cash flow (non-Bitcoin-centric reasons), and still have 25% of their BTC.
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The muted reaction to the sale differed from the announcement in February of last year that Telsa had received $1.5 billion in BTC to add to its balance sheet and plans to accept Bitcoin as payment for some products (which has since been removed).
On the news, the price of Bitcoin immediately shot up by nearly $3,000, bringing the cryptocurrency up. New all-time high Over $43,000.
Swyftx’s head of strategic partnerships, Tommy Honan, told Cointelegraph that Tesla’s decision to buy Bitcoin last year was “the most important moment you can imagine for digital assets.”
“It almost allowed other businesses to put crypto on their balance sheets, and we saw a lot of large institutional investors and small and medium-sized companies coming into the market.”
“The sell-off is not a verdict on Bitcoin, just a cash play, and the market seems to have accepted him,” Musk said. Bitcoin’s price has been flat over the past 24 hours, and we’d be surprised if other big investors follow suit, especially given Bitcoin’s current price.
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