Crypto experts largely disagree with the decision to sell 75% of its Bitcoin (BTC) holdings to Tesla, a typical strategy for companies to improve cash flow during an economic slowdown.
On Wednesday, the electric car maker revealed that it sold 75 percent of its assets in bitcoin during the second quarter and added 9 percent to its balance sheet. Fiat currency totaled $3.6 billion.
In a conference call, Tesla CEO Elon Musk pointed out that the sale "should not be judged against Bitcoin", explaining that due to the ongoing Covid-19 in China, the blockade was due to circulation problems.
[The reason why we sold a lot of BTC assets is that we are not sure when the Chinese Covid ban will be lowered. Therefore, it is very important for us to maximize his cash position."
[Of course, we are willing to enhance his BTC ownership in the future."
Asked by investors whether he sees BTC as a long-term asset for financial statements, Musk said the digital currency is a "sideshow" for Tesla's primary goal of "accelerating the emergence of smooth energy."
"Digital currencies are not something we often think of," he said.
Markus Thielen, a top investment officer at IDEG, a Singapore-based data asset management company, told Cointelegraph that Tesla may sell BTC because of it "is considered and has an impact on the core business."
[I wouldn`t be surprised if Tesla continued to cannibalize BTC after BTC leveled off, otherwise they would have sold 100%."
Kylie Purcell, stock trading expert at comparison site Finder, explained that it's not just the electric car maker that has decided to "back up capital with cash money."
[As the world economy slows and may even sink into recession, it is not uncommon for investors and companies to move funds from more volatile assets into fiat currencies," she noted.
She also added that while bitcoin prices fell after the announcement, there are signs of recovery.
After Tesla announced BTC on Wednesday, the price of Bitcoin fell by about 2.6%. At the time of writing this article has recovered to 23,299 US dollars - close to a one-month high, which means that the digital currency community may not be very happy. Worry about this announcement.
The announcement, which differs from last February's announcement that Telsa had purchased $1.5 billion in BTC, was to increase its balance sheet and plan to accept BTC as payment for some products (although it was subsequently withdrawn).
Tim's news sent Bitcoin up nearly $3,000 immediately, bringing the digital currency to a record high above $43,000.
Related: Bitcoin dips below $23,000 after earnings report shows Tesla sells 75% of BTC
Tommy Honan, head of strategic partnerships at Swyftx, told Cointelegraph that Tesla`s decision to buy bitcoin last year was [a moment for digital currencies."
[It pretty much allowed other companies to put digital currencies on their balance sheets, and since then, we`ve seen a lot of large institutional investors and SMEs flood the market."
[Musk said that the sale was not a judgment on BTC, but a cash settlement, and the market seems to believe him. The price of BTC has stabilized in the past 24 hours. We will be surprised if other big investors follow suit, especially Considering the current price of BTC."
