Tesla, one of the largest institutional holders of Bitcoin, confirmed yesterday that the company has sold almost 75% of its BTC holdings in the second quarter of 2022. According to the quarterly report, Tesla dumped its Bitcoin reserves for nearly $936 million in cash.
In February 2021, Tesla entered the list of the world’s largest public-listed Bitcoin holders after the company purchased $1.5 billion worth of cryptocurrency. However, Elon Musk, the CEO of Tesla, has criticized BTC and other digital currencies in the past few months due to high energy consumption in crypto mining.
In May 2021, Bitcoin saw a dip of almost 20% after Musk called the world’s most valuable digital asset a highly centralized cryptocurrency. The latest dump by Tesla indicates a major change in the company’s overall crypto strategy.
“Quarter-end cash, cash equivalents and short-term marketable securities increased sequentially by $902M to $18.9B in Q2, driven mainly by the free cash flow of $621M, partially offset by debt repayments of $402M. 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 highlighted in its recent report.
Impact on BTC
After a dip of almost 70% from its all-time highs in November 2021, BTC witnessed a strong recovery in the past 7 days. However, Tesla’s latest announcement caused a substantial drop in the price of Bitcoin as the digital currency lost almost 5% of its value. Currently, BTC is trading near $22,800 with a market cap of $435 billion.
“Previous major selloffs have been between 70 to 85 percent, similar to this one before Bitcoin went on to rally to new highs. I am not saying we will necessarily see a new all-time high for BTC this time, but at least a nice bounce should be expected given the extent of the drop and the fact that we are testing the highs from 2017, an old major resistance area,” Fawad Razaqzada, the Market Analyst at City Index, said in a note.
