Recently, Electric carmaker Tesla sold 75% of its Bitcoin holdings last quarter, adding more than $936 million to its balance sheet.
This news was announced during the company earnings call. Tesla CEO Elon Musk claimed this massive sell-off was important for them to maximize their cash position owing to April’s lockdown and shutdown of its Shanghai factory.
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Following this news, the Crypto industry witnessed a massive plunge, pushing many tokens to nose dive from their previous gains.
Many believe this Tesla’s Bitcoin selling will create more negative pressure on the BTC price; however, Tron founder Justin believes it is a piece of great news for Bitcoin holders.
3rd, Tesla completing @Bitcoin transactions shows a good precedence for all enterprises holding #BTC. We believe more big corps will buy in the future. Kudos to @elonmusk !
— H.E. Justin Sun 孙宇晨 (@justinsuntron) July 21, 2022
He also urged that the market should no longer worry about this step of Tesla, as it has been haunting us for a long time. Tesla selling nearly 75% of BTC holdings is good precedence for all enterprises holding BTC and offers more liquidity to other big co-operations willing to buy BTC.
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Bitcoin Price Correction
The news of Tesla selling its Bitcoin has put some price pressure on BTC. On Wednesday, the BTC price tapped the $24,000 level. However, BTC has plunged under the 23,000 level and is trading close to its 200-week moving average of $22,800.
Over the last few weeks, this moving average acted as a major resistance for Bitcoin. If BTC sustains these weekly closing levels, it will be a significant turning point for the Crypto space.
According to Popular crypto market analyst Rekt Capital, currently BTC +6% above the 200-week MA. To turn this level as support, $BTC needs to Weekly Close above $22800
#BTC is +6% above the 200-week MA
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To perform a reclaim of the 200-week MA as support, $BTC needs to Weekly Close above $22800#Crypto #Bitcoin pic.twitter.com/3CRZ8V3o8k
— Rekt Capital (@rektcapital) July 20, 2022
Why did Tesla Sell BTC?
In February 2021, the giant electric-car maker announced a purchase of $1.5 billion worth of Bitcoin, pushing the flagship cryptocurrency’s price to new highs. However, shortly after that, it sold a small portion to test Bitcoin’s liquidity.
In May 2021, Elon Musk stopped accepting Bitcoin as a payment method due to environmental concerns. This February, Tesla reported holding roughly $1.99 billion worth of Bitcoin at the end of 2021.
Elon Musk has said that selling Bitcoin shouldn’t be considered a “verdict” by the company. Tesla will be certainly open to increasing its bitcoin holdings in the future, commits Musk.
However, considering the ongoing uncertainty in the global macro environment, this is unlikely to happen anytime soon. Notably, Tesla didn’t liquidate any of its Dogecoin holdings.
