Bitcoin rebounded after a brief selloff late on Wednesday sparked by news that electric car maker Tesla had sold about 75% of its holdings of the virtual token.
Tesla CEO 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 US$23Â 494.57, after sliding as much as 0.5% to $23Â 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.
Due diligence
“It was important for us to maximise 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 US Federal Reserve’s ability to rein in decades-high inflation. — Hannah Lang, Gertrude Chavez-Dreyfuss and Nivedita Balu, (c) 2022 Reuters