The crypto industry has almost shrugged its shoulders this week to note that the influential carmaker Tesla has sold off almost 75% of its Bitcoin (BTC). Thus, this step was mainly recorded as a purely strategic decision.
On Wednesday, the leading electric car manufacturer announced that it had sold 75% of its Bitcoin assets during the second quarter and thus raised $ 936 million.
However, at the press conference on the quarterly report for Q2, Tesla CEO Elon Musk explicitly stressed that this decision was made to prevent liquidity bottlenecks after a new corona lockdown had been imposed in China. Accordingly, this would be “not a condemnation of Bitcoin”.
According to Musk, “The reason we sold a large part of our Bitcoin is that we were not sure when the lockdowns in China would end again. That’s why it was important for us to have as much cash as possible at our disposal.“
“We definitely have an interest in expanding our Bitcoin assets again in the future.“
When the Tesla CEO was asked in this context whether he sees Bitcoin as a long-term investment product, he replied that the market-leading cryptocurrency is actually just “a side attraction among the side attractions” of Tesla’s main business, which actually has the goal of “advancing the use of sustainable energy”.
“Cryptocurrencies are not something we deal with in detail,” Musk concludes.
Experts follow Musk’s reasoning
Markus Thielen, the chief investor of the Singapore-based crypto asset management company IDEG, underscores this statement by explaining to Cointelegraph that the carmaker most likely only sold its Bitcoin because they were “a distraction from the main business”.
To which he appends:
“I wouldn’t be surprised if Tesla continues to experiment with Bitcoin as soon as the price stabilizes again, because otherwise they would have sold 100% of their BTC.“
Meanwhile, trading expert Kylie Purcell points out that the electric car manufacturer is not the only company that is currently “shoveling free cash”.
“The world is facing a recession and possibly even a global economic crisis, so it is not uncommon for investors and companies to withdraw money from risky financial products and convert it into national currencies,” says the expert.
In addition, she points out that the Bitcoin price fell slightly after Tesla’s announcement, but was able to recover quickly.
For example, the market-leading cryptocurrency fell about 2.6% on the day of the announcement by Tesla, but in the meantime it has risen again to more than 23,000 US dollars. This has almost reached the previous monthly high again, which clearly shows that the market has not mourned the sale of the car manufacturer for too long.
So Tesla has already sold off their inventory, appears to have mainly done so to maintain positive cash flow (non bitcoin-centric reasons), and still has 25% of their BTC.
Maybe I’m coping but seems like a nothing burger.
– Will Clemente (@WClementeIII) July 20, 2022
Bitcoin becomes independent from Tesla
The restrained reaction stands in clear contrast to the picture that had emerged in February 2021 after the purchase of Tesla. At that time, the carmaker had invested in BTC for 1.5 billion US dollars and at the same time promised to possibly even accept the cryptocurrency as a means of payment in the future. However, the latter project has since been cancelled again.
On this news, the Bitcoin price suddenly went up by almost 3,000 US dollars, which meant that a new record high of 43,000 US dollars could be set.
Tommy Honan of Swyftx retrospectively notes to Cointelegraph that Tesla’s purchase decision at that time was “perhaps the most important moment ever” for the crypto market. So he gives to consider:
“This has almost given the other companies permission to include Bitcoin in their books. As a result, many large institutional investors and small to medium-sized companies have finally entered the market.“
“Musk has now emphasized that the sale was not a condemnation of Bitcoin, but is due to the need for cash, and the crypto market seems to be following this reasoning. The Bitcoin price has recently caught up again and I would be surprised if other investors get out now,“ as the expert summarizes.