EV maker Tesla sold 75% of its bitcoin holdings during Q2, it revealed.

Elon Musk’s EV maker company Tesla (NASDAQ: TSLA) sold off $936 million, or three-quarters of its stash of bitcoins, in a bid to raise fiat money amidst lockdowns in China and a volatile global economic environment. The company had invested $1.5 billion in bitcoin early last year, saying the crypto offered “long-term potential.” (CNBC)

Musk’s explanation

“The reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the Covid lockdowns in China would alleviate,” said Musk on a conference call. “So it was important for us to maximize our cash position.”

He also clarified that Tesla’s crypto sale “should not be taken as a verdict on bitcoin,” and that “we are certainly open to increasing our bitcoin holdings in the future.”

Tesla: Sale gives the wrong message

“It makes sense that bitcoin would be considered as an option to sell given the macroeconomic backdrop of rising interest rates. However, Tesla’s decision will not sit well with Bitcoin maximalists, as it gives the impression to many institutions that BTC is not a suitable reserve asset or safe haven,” Marcus Sotiriou, Analyst at digital asset broker GlobalBlock, said in an emailed comment to Cryptonews.

Given Tesla’s opening stock of an estimated BTC 42,000, a sale of 75% of that quantity that realized $936 million would equate to an approximate sale price of about $29,700.

According to Sotirou, without the BTC sale of $936 million, Tesla would have reported a negative cash flow of $89 million.

It was also a good example of risk management by Musk, considering BTC slumped by about 40% after the sale.

Related Story: Tesla Converts $1.5B Of Surplus Cash To Bitcoin