- Tesla has sold 75% of its bitcoin holdings for $936 million
- The company is thought to have taken a loss on its investment
- Elon Musk said that the sale should not be “a verdict on Bitcoin”
Bitcoin dropped more than $1,000 overnight after a Tesla filing revealed that it had sold 75% of its Bitcoin holdings, a year after Elon Musk said “I don’t dump”. Bitcoin fell from $24,100 to $22,800 in the hours after news of the sale began to filter through, although the fall is in line with an anticipated test of resistance as support. Tesla bought $1.5 billion worth of bitcoin in February 2021 as the bull run was getting into its stride, and Musk said on an earnings call that the move was not a “verdict on bitcoin” but was instead a way of getting some cash on hand.
Tesla In Need of Cash Injection
Tesla’s 2021 Bitcoin buy was a headline-making event that helped progress the Bitcoin bull run well into the $30,000s, although it sold 10% just weeks later as a liquidity test. Tesla held the rest of its holdings through the entire bull run, with Musk saying that the company was only selling now in order to free up some cash.
Musk told investors on Wednesday that the sale “should not be taken as some verdict of bitcoin” and that that company hadn’t sold any of its DOGE. Tesla is facing a difficult time due to a shutdown of its Shanghai factory and production challenges at new plants. If it hadn’t freed up capital through its Bitcoin sale its cash reserves would have been nearly $1 billion lighter.
Tesla Sold for Loss
Tesla is thought to have bought its bitcoin for about $34,000, and while its sale price is not clear it is likely to have liquidated the majority of its position for a loss, which is an incredible position considering it had the possibility to sell for a 2x in November last year.
The drop in the Bitcoin price was not actually unexpected, as we suggested yesterday that such a move was on the cards anyway:
If Bitcoin can turn this area into support it will act as a very bullish sign that it is ready for continuation, with or without Tesla.