Following a brief sell-off late on Wednesday spurred by the revelation that electric carmaker Tesla Inc had sold nearly 75% of its holdings in the digital currency, bitcoin has since recovered.
The sale was motivated by worries over Tesla’s “total liquidity,” according to Elon Musk, the company’s chief executive.
After falling as much as 0.5 percent to $23,268.92 on the news, the biggest cryptocurrency in the world was recently up 1.04 percent at $23,494.57.
More than a year after investing $1.5 billion in bitcoin at the height of its meteoric rise and popularity, Tesla sold $936 million worth of the cryptocurrency in the second quarter.
Musk has a history of being a vocal proponent of cryptocurrencies. Dogecoin and bitcoin prices frequently increase as a result of his predictions for the future of cryptocurrencies and disclosures regarding his holdings of digital assets.
On Tesla’s earnings call, Musk stated that production issues caused by lockdowns brought on by COVID-19 in China were the main driver behind the sale.
It was crucial for us to maximize our cash position, according to Musk. “This should not be interpreted as a judgment on bitcoin since we are certainly willing to increase our holdings in the future. Just the company’s general liquidity was something we were worried about.”
Musk noted that none of Tesla’s dogecoin, a meme-based cryptocurrency that he has praised, was sold.
Before ceasing in May 2021, Tesla accepted bitcoin for less than two months. After conducting its due diligence on the amount of renewable energy required to mine bitcoin, Musk indicated the company might resume accepting it.
Similar to the stock market, bitcoin has been on the upward so far this week as investors seem more confident in the US Federal Reserve’s capacity to control decades-high inflation.
