Experts reveal what Tesla's $936 million sell-off means for Bitcoin

Crypto industry experts were largely unfazed by Tesla's decision to sell 75% of its bitcoin reserves, saying it was a fairly typical strategy for companies to improve cash flow during an economic slowdown.

On Wednesday, the electric car maker revealed that it had sold 75% of its bitcoin holdings during the second quarter, adding $936 million in fiat to its balance sheet.

Tesla CEO Elon Musk noted on a conference call that the sale "should not be viewed as a verdict on Bitcoin," explaining that the move was motivated by China's ongoing COVID-19 lockdown. Liquidity concerns.

“The reason we dumped a lot of our bitcoin reserves is that we’re not sure when the lockdown in China will ease. So it’s important for us to maximize our cash position.”

“We are definitely open to accumulating Bitcoin in the future.”

During the earnings call, investors asked Musk if he saw Bitcoin as a long-term asset, and Musk said that Bitcoin was the "secondary of the secondary" among Tesla's main goals. It is "accelerating the emergence of stable energy sources".

"Cryptocurrency is not something we think about very often," he said.

Markus Thielen, chief investment officer at IDEG, a Singapore-based digital asset management firm, told Cointelegraph that Tesla may be selling its bitcoin because it is “viewed as a disruption to its core business.”

“I wouldn’t be surprised if Tesla continued to buy Bitcoin when it stabilized, otherwise they would have sold it all.”

Kylie Purcell, stock trading expert at comparison site Finder, explained that the electric car maker isn't the only company that has decided to "back up capital with cash."

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“As the global economy slows and may even enter a recession, it is not uncommon for investors and businesses to move funds out of volatile assets and into fiat currencies,” she noted.

She also added that while the price of bitcoin fell after the announcement, there were already signs of recovery.

On Wednesday, after Tesla's announcement, the price of Bitcoin fell about 2.6%, and at the time of writing it was back at $23,299, close to a one-month high, which means that the crypto community may not be overwhelmed by Tesla's announcement. The statement was too worrying.

The market's reaction to the sell-off differed from its statement last February, when Tesla announced it was buying $1.5 billion in bitcoin, adding it to its balance sheet and planning to accept bitcoin as payment for certain products (However, this plan was later cancelled).

As soon as the news came out at that time, the price of Bitcoin immediately soared by nearly $3,000, reaching a record high of more than $43,000.

Tommy Honan, head of strategic partnerships at Swyftx, told Cointelegraph that Tesla’s decision to buy Bitcoin last year was “a big moment for a digital asset you can imagine”:

“It almost gave other businesses a reason to put cryptocurrencies on their balance sheets, and we’ve seen a lot of large institutional investors as well as small and mid-cap companies rush into the market since then.”

Musk said the sell-off was not a verdict on Bitcoin, but just a cash deal, and it looks like the market has taken him at his word. The price of Bitcoin has stabilized over the past 24 hours and we would be surprised if other big investors did the same, especially given Bitcoin's current price. "