The Bitcoin (CRYPTO: BTC) price has, so far, managed to shrug off news that Elon Musk's Tesla Motors (NASDAQ: TSLA) has sold some 75% of its holdings of the world's top crypto.
The digital token is up 1% over the past 24 hours, currently trading for US$23,273 (AU$33,849).
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Why did Tesla sell most of its Bitcoin holdings?
The global electric vehicle company released its second quarter report (Q2 2022) yesterday (overnight Aussie time).
In that report, Tesla listed a number of factors that had negatively impacted its year-on-year operating income. Among those, the company named "Bitcoin impairment".
While apparently having lost money on its crypto venture to date, the sale did add US$936 million to the company's books.
"As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet," Tesla stated.
Tesla invested US$1.5 billion into the crypto asset in early February 2021. The Bitcoin price rocketed on the news of Elon Musk's support of the token, reaching new record highs at the time of just over US$44,000.
With the Bitcoin price skyrocketing in the early months of 2021, Tesla turned around and sold roughly 10% of its holdings in short order, reporting $272 million in proceeds from those sales in its April 2021 quarterly update.
Is this the end of Elon Musk's love affair with cryptos?
It's unlikely that Elon Musk will turn his back on cryptos.
According to the world's richest man, Tesla's sale shouldn't be viewed as "some verdict on Bitcoin".
Rather the electric vehicle company was looking to bolster its cash holdings amid the lingering impacts of the global pandemic.
Josh Olszewicz, head of research at Valkyrie Investments, said Tesla likely sold its Bitcoin holdings for an average price of approximately US$30,000. That leaves the company holding around US$218 million of the crypto at current prices.
According to Olszewicz (quoted by Bloomberg):
Strongly bearish market conditions since the beginning of the year as well as the need for cash on the balance sheet likely contributed to this decision. From a treasury management perspective, downside volatility may have been too unattractive to ignore in the near term.
