Tesla sells 75% of Bitcoin holdings. What does it mean for cryptocurrency?

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It was only last year when Elon Musk and his EV car-making company made billions of dollars bet on Bitcoin sending the cryptocurrency’s prices soaring. A year later, after a lot of promises by Musk, Tesla has sold 75% of its Bitcoin holdings.

The numbers: 

  1. Tesla sold 75% of its Bitcoin holdings according to revelations made in the second-quarter earnings statement on Wednesday, July 20, 2022.  
  2. Tesla still owns 25% of Bitcoin, which one report said was around 10,000 Bitcoins.
  3. The company revealed that the Bitcoin sales added $936 million in cash to its balance sheet.
  4. As of now, Tesla said the “remaining digital assets” were worth $218 million
  5. In 2021, Tesla had invested $1.5 billion in Bitcoin. Other than Bitcoin, Tesla also has investments in Dogecoin, often praised by Elon Musk. 

Why did Tesla sell its Bitcoin holdings? During a conference call on Wednesday, Elon Musk said, “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 maximise our cash position.”

This should be not taken as some verdict on Bitcoin… We are certainly open to increasing our Bitcoin holdings in the future.

– Elon Musk

Elon Musk, in addition, also said that Tesla wasn’t dumping any of the Dogecoin holdings. 

Reports say Tesla dumped its Bitcoin holdings to avoid a negative cash flow. Negative cash flow occurs when a business spends more than what it makes in a given period of time. 

Many questions for Musk: There are a lot of questions popping up over Tesla’s recent move.

  • People want to know how the sale will affect the overall cryptocurrency market;
  • Whether the sale tells anything about Tesla’s business health;
  • Broken promises by Elon Musk and
  • Whether Tesla had to sell its share at a loss. 

Has it hurt the cryptocurrency market? CoinTelegraph, a cryptocurrency news portal said that experts were not worried. Most experts and investors say that Tesla’s decision was not based on Bitcoin, but that it was a business decision to be made. 

Some said that while the overall mood of the cryptocurrency market recently has not been great, Tesla’s announcement did not really affect the market much. They also said that Bitcoin’s price has recovered over the last 24 hours after the news broke. 

Some even pointed out that Tesla had already made the sale and so the news breaking doesn’t really affect the market. 

Did Tesla sell its shares at a loss? This is mostly speculation, but netizens have tried to do some math to figure out whether Tesla incurred any loss or not. 

How is it break-even?

Others are not so optimistic and say Tesla suffered a loss of at least 8-10%. 

What about Tesla’s business health? Tesla and Elon Musk both seem to be having a not-so-great financial period. 

Elon Musk himself sold billions of dollars worth of shares at the company to pay for the now-messy Twitter deal. He finds himself fighting a lawsuit now. Elon Musk also announced mass layoffs because of a “super bad feeling” about the economy and now the layoffs seem to have affected the autopilot team at the company. And Tesla also lost its AI head earlier this month. 

On the brighter side, Tesla’s collaboration with Uber and Hertz to rent out EVs to drivers seems to be working well. 

What about Elon Musk’s promises? If there are some things that have not aged well over the short period of a year, they are Elon Musk’s promises on Twitter. 

*cough, cough*

Bring on the salt: The world and Elon Musk’s followers have learned a lot this year. One thing is to never take Elon Musk on his word and even his words that can move markets are not set in stone; not even his promises. Now that Elon Musk says the Tesla Bitcoin sell-off shouldn’t be taken as an opinion on cryptocurrency and is only a business decision, perhaps that should also be taken with a truckload of salt.