Crypto industry experts are largely unimpressed with Tesla’s decision to sell 75% of its Bitcoin (BTC) holdings, saying it’s a fairly typical strategy for businesses to improve cash flow during economic downturns.
On Wednesday, the electric vehicle maker revealed that it sold 75% of its bitcoin holdings in the second quarter, adding $936 million in fiat to its balance sheet.
In a conference call, Tesla CEO Elon Musk noted that the selloff “should not be taken as a verdict on Bitcoin,” explaining that the move was due to liquidity concerns given the continued freezes in Bitcoin. Covid in China.
“The reason we sold off a bunch of our bitcoin holdings was because we didn’t know when the Covid lockdowns in China were going to ease. It was therefore important for us to maximize our cash position.
“We are certainly open to increasing our Bitcoin holdings in the future.”
Asked by investors on the earnings call whether he views Bitcoin as a long-term asset, Musk said the cryptocurrency is a “side show” of Tesla’s primary focus, which is “to accelerate the advent of a stable energy”.
“Cryptocurrency is not something we think about a lot,” 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 a distraction from its core business.”
“I wouldn’t be surprised if Tesla continues to snack on bitcoin when bitcoin stabilizes, otherwise they would have sold 100%.”
Comparison site Finder stock trading expert Kylie Purcell said the electric car maker wasn’t the only one to make the decision to “boost currency capital”.
“As the world heads into an economic slowdown and possibly a recession, it is not unusual for investors and businesses to shift capital away from more volatile assets into fiat currency,” he said. she noted.
She also added that while Bitcoin price fell after the announcement, there are already signs of recovery.
On Wednesday, Bitcoin’s price fell around 2.6% following Tesla’s announcement and fell back to $23,299 at the time of writing, near its one-month high. which means the crypto community may not have been too concerned about the announcement.
So, Tesla has already sold its inventory, appears to have done so primarily to maintain positive cash flow (for non-bitcoin-centric reasons), and still holds 25% of its BTC.
Maybe I’m getting by, but I look like a nobody.
— Will Clemente (@WClementeIII) July 20, 2022
The quiet reaction to the sale played out differently than 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 to accept Bitcoin as a medium. payment for certain products (although this was later discontinued).
The news at the time saw the price of Bitcoin immediately jump nearly $3,000, taking the cryptocurrency to a new all-time high above $43,000.
Related: Bitcoin price drops below $23,000 after earnings report reveals 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 gave other companies permission to put crypto on their balance sheets and we saw a lot of large institutional investors, as well as small and midsize companies flooding the market from that point on.”
“Musk said the selloff was not a verdict on Bitcoin, just a cash game, and it looks like the market took him at his word. Bitcoin price has stabilized over the past 24 hours and we’d be surprised if other big investors followed suit, especially given Bitcoin’s current price.