Tesla sells 75 per cent of its Bitcoin as profits slump in crypto U-turn for Elon Musk | Euronews

Tesla has sold a large proportion of its cryptocurrency holdings, after making waves last year by revealing that it had a significant investment in bitcoin.

The company, which is the second largest manufacturer of electric vehicles in the world, exchanged 75% of its stake in bitcoin, the value of which has plummeted in recent months.

Reading: Elon musk sold bitcoin

On Wednesday, Tesla sold $936 million (919 million euros) of the world’s largest crypto during its second financial quarter, worth around $2 billion (1.96 billion euros) at the end of 2021.

In February, it was revealed that the company invested $1.5 billion (€1.46 billion) in cryptocurrencies, causing demand to rise and driving up the value of bitcoin.

Crypto markets are notoriously volatile, with bitcoin reaching an all-time high of nearly $70,000 (€68,195) in November 2021. Now, it is trading for less than $25,000 (€24,368).

a difficult quarter for tesla amid production challenges

The announcement comes after a shaky end to tesla’s second quarter of 2020: the company’s profit fell 32% from record levels earlier this year.

The drop in profit can be attributed to difficulties keeping up with demand due to the closure of its factory in Shanghai and production challenges at other plants.

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In June, Tesla CEO Elon Musk said he had a “super bad feeling” about the economy and claimed the company needed to lay off 10 percent of the company’s salaried workers, Reuters reported.

musk has said that the sale of tesla’s bitcoin holding was to maximize his cash position at a time of uncertainty. In an earnings call on Wednesday, Musk noted that the move “should not be taken as a bitcoin verdict.”

musk’s cryptographic u-turn?

Last year, Tesla stopped accepting bitcoin as payment for its cars due to concerns about the impact bitcoin has on the environment.

At the time of the announcement, Musk tweeted that he would not sell the Bitcoin owned by Telsa.

Does this recent news indicate that the billionaire tech entrepreneur has changed his mind about cryptocurrencies? possibly.

“The thing about elon is that no one really knows what he’s thinking,” dr. konstantinos stylianou, professor of competition law and regulation at the university of leeds with a focus on digital markets, to euronews below.

“my impression is that there are many good reasons to sell bitcoin that make financial sense.”

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“The official excuse that tesla needs liquidity could also be true: there has been a market slowdown, problems with production and inflation,” he added.

“if you look at bitcoin fundamentals right now, they are worse than they were a few months ago, but they have certainly remained high enough that people are not abandoning the currency entirely.”

dr. Garrick Hileman, a blockchain and cryptocurrency researcher at the London School of Economics, notes that “it is reasonable to accept” that Musk sold his bitcoin holdings “because of the company’s liquidity position and concerns about China, rather than any change.” material on your bitcoin vision – or keep bitcoin on your balance sheet.”

“If they had gotten out of the full position, it would have been a more difficult statement to be confident in terms of whether this is really bearish for crypto,” he told euronews below.

“however, there is no denying that tesla has clearly sold most of its bitcoins; it is not a core stake that they retain in stressful circumstances.

“I think it speaks to some of the challenges around the idea that businesses are close to adopting bitcoin in a meaningful way, and holding onto that bitcoin in difficult circumstances. I think if that’s going to happen in the future, there’s still some time to go.”

Ultimately, the news does not indicate that bitcoin is doomed or that musk has turned his back on crypto. the news is not “necessarily negative for the currency. the 75 percent tesla sale doesn’t really indicate the long-term potential [for the coin],” added stylianou.

“but then again, nobody knows what he’s thinking… he’s very unpredictable and extremely strategic. and his public statements do not necessarily reflect what he is actually doing,” he said.

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