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Bitcoin recovers after falling on news Tesla sold 75% of its holdings

cde.news desk 21 July 2022, 06:30 · 2 min read

A bitcoin in a slot-in drive reflects in front of a monitor showing the logo of US electric car manufacturer Tesla, in Duesseldorf, Germany, 17 February 2021. For the first time, the cryptocurrency Bitcoin has exceeded the mark of 50,000 dollars. Most recently, it became known that Elon Musk, CEO of the US electric car manufacturer Tesla, is said to have invested 1.5 billion dollars in Bitcoin. In recent weeks, he had boosted Bitcoin as well as other Internet currencies with positive news via the short message service Twitter. Credit card provider MasterCard also announced that it would open its payment network to cryptocurrencies. Visa plans to help banks introduce trading with Bitcoin and other cryptocurrencies by launching software with API access. EPA-EFE/SASCHA STEINBACH

NEW YORK, (Reuters) – Bitcoin rebounded after a brief sell-off late on Wednesday sparked by news that electric carmaker Tesla Inc O had sold about 75% of its holdings of the virtual token.

Tesla Chief Executive Elon Musk cited concerns about his company’s “overall liquidity” as the reason for the sale.

The world’s largest cryptocurrency was last up 1.04% at $23,494.57, after sliding as much as 0.5% to $23,268.92 on the news.

Tesla sold $936 million worth of bitcoin in the second quarter, more than a year after the company bought $1.5 billion of the cryptocurrency at the peak of its massive growth and popularity.

Musk has been an outspoken supporter of cryptocurrencies. His statements on the future of crypto and disclosures about his ownership of digital assets often boost the price of dogecoin and bitcoin.

On Tesla’s earnings call, Musk said the primary reason for the sale was uncertainty about lockdowns due to COVID-19 in China, which have created production challenges for the company.

“It was important for us to maximize our cash position,” Musk said. “We are certainly open to increasing our bitcoin holdings in future, so this should not be taken as some verdict on bitcoin. It’s just that we were concerned about overall liquidity for the company.”

Musk added that Tesla did not sell any of its dogecoin, a meme-based cryptocurrency that he has touted.

Tesla accepted bitcoin as payment for less than two months before stopping in May 2021. Musk has said the company could resume accepting bitcoin once it conducts due diligence on the amount of renewable energy it takes to mine the currency.

Bitcoin has been in recovery mode so far this week, in line with the stock market, as investors appear more optimistic about the U.S. Federal Reserve’s ability to rein in decades-high inflation.

(Reporting by Hannah Lang, Gertrude Chavez-Dreyfuss and Nivedita Balu; Editing by Marguerita Choy, Richard Pullin and Richard Chang)