Tesla has sold off much of its cryptocurrency holdings, after making waves last year when it revealed it had a large investment in BTC. Elon Musk is not immune to criticism at the moment and we expect him to provide logical explanations for this unexpected sale.
A thunderclap at Tesla
Tesla’s second quarter of 2022 ended wobbly, with the electric car maker announcing a drop in profit after struggling to meet demand due to the closure of its Shanghai factory and the challenges of production in the new factories. The company also sold 75% of its bitcoin holdings, causing the cryptocurrency price to plummet. Tesla’s second-quarter profit fell 32% from record first-quarter levels, as the company last reported net profit of $2.26 billion.
The earnings report comes more than a month after CEO Elon Musk said he had a lingering bad feeling about the economy and that the company needed to lay off around 10% of its workers. The company has not been immune to global supply chain issues and economic woes. At the start of the quarter, Tesla had to temporarily close its Shanghai super factory to comply with pandemic lockdown restrictions, leading to a rare drop in delivery numbers.
A strained relationship from the start
Last year, Tesla stopped accepting bitcoins as payment for its cars due to concerns about bitcoins’ impact on the environment. At the time of the announcement, Musk tweeted that he would not sell the bitcoins that Tesla owned. The recent news only indicates This recent news only indicates how often the billionaire tech entrepreneur changes his mind about cryptocurrency.
CEO Elon Musk said bitcoin holdings were sold for cash due to uncertainty over the length of the pandemic lockdown period in China. He added that Tesla is ready to increase its bitcoin holdings in the future even though the price of bitcoin has fallen about 50% since the start of the year. Elon Musk also said Tesla has reason to believe inflation may decline due to lower prices for most commodities.
He refrained from making economic predictions, but said the prices of raw materials, such as steel and aluminum, tend to fall. It’s clear now, to him, bitcoin is doomed and his actions prove it.
Traders shouldn’t be surprised that Musk backed Tesla’s bitcoin selloff, given that the crypto’s winter was clearly in place and the balance sheet needed strengthening.
Do you know the expression BFF? Best Friend Forever? Well I, Annaëlle, am Victoria’s BFF. Passionate about crypto myself, I come to lend him a hand on his blog… by lending him my pen 🙂
I also publish on LinkedIn, follow me!