Bitcoin recovers after falling on news Tesla sold 75% of its holdings

A representation of the virtual cryptocurrency Bitcoin is seen in this photo illustration taken October 19, 2021. REUTERS / Edgar Su / File Photo

NEW YORK, July 20 (Reuters) – Bitcoin picked up again after a short sale late Wednesday triggered by news that electric car maker Tesla Inc (TSLA.O) had sold around 75% of its holdings of the virtual token.

Tesla CEO Elon Musk cited concerns about the company’s “total liquidity” as the reason for the sale.

The world’s largest cryptocurrency last rose 1.04% to $ 23,494.57, after falling as much as 0.5% to $ 23,268.92 on the news.

Tesla sold bitcoin for $ 936 million in the second quarter, more than a year after the company bought $ 1.5 billion of the cryptocurrency on top of its massive growth and popularity.

Musk has been a staunch supporter of cryptocurrencies. His statements about the future of crypto and revelations about his ownership of digital assets often increase the price of dogecoin and bitcoin.

At Tesla’s earnings call, Musk said the primary reason for the sale was uncertainty about shutdowns due to COVID-19 in China, which has created production challenges for the company.

“It was important for us to maximize our cash position,” Musk said. “We are certainly open to increasing our bitcoin holdings in the future, so this should not be taken as a judgment 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 dogecoins, a meme-based cryptocurrency that he has designated.

Tesla accepted bitcoin as payment for less than two months before stopping in May 2021. Musk has said the company can resume accepting bitcoin when it conducts due diligence on the amount of renewable energy needed to recover the currency.

Bitcoin has been in recovery mode so far this week, in line with the stock market, as investors seem more optimistic about the US Federal Reserve’s ability to curb decades of high inflation.

Reporting by Hannah Lang, Gertrude Chavez-Dreyfuss and Nivedita Balu; Edited by Marguerita Choy, Richard Pullin and Richard Chang

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