Bitcoin resists despite Musk selling 75% of Tesla's BTCs
Bitcoin trades below $23,000 on Thursday, after Wednesday's high above $24,000, as it tries to rebound from recent selling triggered by news that Tesla sold about 75% of its holdings of the virtual token.
Elon Musk, CEO of the electric car maker, cited concerns about his company's "overall liquidity" as a reason for the sale. Tesla sold $936 million worth of Bitcoins in the second quarter, more than a year after the company bought $1.5 billion worth of the cryptocurrency at the peak of its massive growth and popularity.
Musk has been an outspoken supporter of cryptocurrencies. His comments on the future of cryptocurrencies and disclosures about his ownership of digital assets often boost the price of Dogecoin and Bitcoin.
At Tesla's earnings results conference call, Musk stated that the main reason for the sale was uncertainty over shutdowns due to Covid-19 in China, which created production challenges for the company. "It was important for us to maximize our cash position," Musk explained. "We're certainly open to increasing our holdings in Bitcoin in the future, so this shouldn't be taken as a verdict on Bitcoin. It's just that we were concerned about the overall liquidity of the company."
Musk added that Tesla did not sell any of its Dogecoin, a meme-based cryptocurrency he promotes.
Tesla accepted Bitcoin as payment for less than two months before ceasing to do so in May 2021. Musk stated that the company could return to accepting Bitcoin once it performs due diligence on the amount of renewable energy needed 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 U.S. Federal Reserve's ability to rein in inflation at multi-decade highs. The digital asset broke through resistance at $23,000 on Wednesday, opening the door for it to head towards $25,000, but the price action has weakened in recent hours.
The market, in general, went through a notable correction since yesterday and experts, in general, considered it normal for digital assets to have lost their 'momentum' with declines of up to 10% in 24 hours for some of the tokens that rose the most recently. Ethereum, in particular, is also back below $1,500. Bitcoin´s behaviour over the next few hours will be crucial to finish determining whether the rallies have been nothing more than a correction after the sharp declines and, indeed, technical analysis suggests a consolidation pattern, which is nothing more than a break before the declines resume. Total capitalization is still over $1 trillion.