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The CEO of Tesla stated that the transaction "should not be taken as a verdict on Bitcoin" and that the company is "certainly open to increasing our Bitcoin holdings in the future."
Experts in the crypto sector are mainly unconcerned by Tesla's move to sell 75% of its Bitcoin (BTC) holdings, seeing it as a standard method for firms to enhance cash flow during economic downturns.
The electric car maker disclosed on Wednesday that it had sold 75 percent of its Bitcoin assets in the second quarter, adding $936 million in fiat currency to its balance sheet.
Elon Musk, CEO of Tesla, stated on a conference call that the transaction “should not be seen as a judgment on Bitcoin,” noting that the decision was prompted by liquidity concerns in light of China’s ongoing COVID-19 lockdowns.
“The reason we sold a bunch of our Bitcoin holdings was that we were uncertain as to when the Covid lockdowns in China would alleviate. So it was important for us to maximize our cash position: We are certainly open to increasing our Bitcoin holdings in the future.”
When asked by investors on the results call if he saw Bitcoin as a long-term investment, Musk stated that the cryptocurrency was a “sideshow to the sideshow” compared to Tesla’s primary objective, which is “to accelerate the advent of stable energy.”
He stated, “Cryptocurrency is not something we think of a lot.”
Markus Thielen, a chief investment officer of Singapore-based digital asset management IDEG, told Cointelegraph that Tesla likely sold up its Bitcoin as it was “seen as a distraction from their primary business:”
“I would not be surprised if Tesla keeps nibbling in Bitcoin when Bitcoin stabilizes, otherwise they would have sold 100%.”
Kylie Purcell, a share trading specialist at comparison website Finder, stated that the electric vehicle maker is not alone in its desire to “bolster capital in monetary currencies.”
“With the world heading into an economic slowdown and possibly a recession, it’s not unusual for investors and companies to move capital away from more volatile assets into fiat currency,” she noted.
She said that even though Bitcoin’s price fell after the announcement, there are already indications of a comeback.
Bitcoin’s price dropped roughly 2.6% on Wednesday following Tesla’s statement and has since recovered to $23,299 at the time of writing, indicating that the crypto community may not have been very disturbed by the news.
Unlike the revelation in February of last year that Tesla had added $1.5 billion in BTC to its balance sheet and planned to accept Bitcoin as payment for some items, the reaction to the sale was quiet (though this was later scrapped).
The announcement then caused Bitcoin’s price to increase by about $3,000, sending it to a new all-time high of $43,000.
Tommy Honan, head of strategic alliances at Swyftx, told Cointelegraph that Tesla’s choice to purchase Bitcoin last year was “as significant a moment for digital assets as you can imagine:”
“It almost gave other businesses permission to put crypto on their balance sheets and we saw a lot of big institutional investors, as well as small and mid-cap companies flood into the market from that point.”
“Musk stated that the sell was not a judgement on Bitcoin but rather a cash move, and the market appears to have accepted him at his word. Bitcoin’s price has steadied over the previous 24 hours and we’d be astonished if additional major investors followed suit, especially considering the present price of Bitcoin.”
