Bitcoin fell late Wednesday after Tesla Inc. announced that it had converted about 75% of its virtual token purchases into fiat.
Bitcoin rebounded late Wednesday after a brief sell-off sparked by news that electric car maker Tesla Inc has sold about 75% of its virtual token holdings.
Tesla CEO Elon Musk cited concerns about the company’s “overall liquidity” as a reason for the sale.
The world ‘s largest cryptocurrency rose 1.04% to $23,494.57 after dropping 0.5% to $23,268.92 on the news.
Tesla sold $936 million worth of bitcoins in the second quarter, a year after it bought $1.5 billion in crypto, which was at the peak of its tremendous growth and popularity.
Musk was an outspoken proponent of cryptocurrencies. His statements about the future of cryptocurrencies and his disclosures of ownership of digital assets often drive up the price of Dogecoin and Bitcoin.
Musk said in Tesla’s earnings call that the main reason for the sale was uncertainty over China’s COVID-19 shutdown that caused production problems for the company.
“It was important to maximize the cash position, ” Musk said. “We are clearly open to the possibility of increasing our Bitcoin holdings in the future, so this should not be taken as some verdict for Bitcoin. It’s just that we were concerned about the company’s overall liquidity.”
Musk added that Tesla did not sell Dogecoin, the meme-based cryptocurrency he was promoting.
Tesla has accepted Bitcoin as payment for less than two months before being discontinued in May 2021. Musk said it could resume accepting bitcoin once the company does due diligence on the amount of renewable energy needed to mine the currency.
Bitcoin has been in recovery mode with the stock market until this week as investors look more optimistic about the Fed’s ability to contain decades of high inflation .