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Sunday, Aug 14, 2022

Bitcoin suffers briefly after Tesla sells majority of its holdings

Bitcoin suffers briefly after Tesla sells majority of its holdings

Tesla bought $1.5bn (£1.2bn) of bitcoin more than a year ago, but on Wednesday it said it had sold $936m (£783m) during its second financial quarter.
Bitcoin lost half-a-percent overnight after Tesla said it had sold about 75% of its holdings of the virtual token.

The world's largest cryptocurrency slid to $23,268.92 (£19,489) after the news, although it rebounded later and was last up 1.41% at $23,578.75.

Tesla bought $1.5bn (£1.2bn) of bitcoin more than a year ago, but on Wednesday it said it had sold $936m (£783m) during its second financial quarter.

Tesla chief executive Elon Musk, a backer of cryptocurrency, said the main reason for the sell-off was uncertainty about China, which has seen its economy hit by strict 1COVID1 lockdowns.

Mr Musk, the world's richest man, said: "We are certainly open to increasing our bitcoin holdings in future, so this should not be taken as some verdict on bitcoin.

"It's just that we were concerned about overall liquidity for the company."

Laura Hoy, analyst at Hargreaves Lansdown, said: "The bitcoin losses point out an important part of the Tesla investment case - its eccentric owner.

"While Musk's impressive innovation has served the company well, his personal flair is starting to raise governance questions."

The news came as the electric carmaker reported that its total revenue had fallen to $16.93bn (£14.18bn) in the second quarter from $18.76bn (£15.71bn) a quarter earlier.

It said increasing the price of its best-selling vehicles had helped to offset challenges caused by China's 1COVID1 lockdowns.

The US price of Tesla's Model Y long-range version is up more than 30% since the start of 2021 to $65,990 (£55,270).

Mr Musk said he expected inflation to ease by the end of the year - having previously said he had a "super-bad feeling about the economy" - and his company promised a "record-breaking second half".

Tesla shares were up about 1% in after-hours trading, but were down about 40% from their November peak.
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