Bitcoin rallies after falling on news Tesla has sold 75% of its holdings

A representation of the virtual cryptocurrency Bitcoin is seen in this illustration taken October 19, 2021. REUTERS/Edgar Su/File Photo

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NEW YORK, July 20 (Reuters) – Bitcoin rebounded after a brief selloff on Wednesday evening sparked by news that electric car maker Tesla Inc (TSLA.O) had sold around 75% of its virtual token holdings.

Tesla Chief Executive Elon Musk cited concerns about his company’s “overall liquidity” as the reason for the sale.

The world’s largest cryptocurrency last rose 1.04% to $23,494.57, after slipping as much as 0.5% to $23,268.92 on the news.

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Tesla sold $936 million worth of bitcoin in the second quarter, more than a year after the company bought $1.5 billion worth of cryptocurrency at the height of its massive growth and popularity.

Musk has been a strong supporter of cryptocurrencies. His statements about the future of crypto and his revelations about his ownership of digital assets often drive up the price of dogecoin and bitcoin.

During Tesla’s earnings call, Musk said the main reason for the sale was uncertainty over COVID-19 lockdowns in China, which created production issues for the company.

“It was important for us to maximize our cash position,” Musk said. “We’re certainly open to increasing our bitcoin holdings in the future, so this shouldn’t be taken as a verdict on bitcoin. It’s just that we were concerned about the overall liquidity of the business. “

Musk added that Tesla had not sold any of his dogecoins, a meme-based cryptocurrency he touted.

Tesla accepted bitcoin as payment for less than two months before shutting down in May 2021. Musk said the company may start accepting bitcoin again once it does its due diligence on the amount of money. renewable energy needed to mine the currency.

Bitcoin is in recovery mode so far this week, in line with the stock market, with investors appearing more optimistic about the US Federal Reserve’s ability to contain decades-high inflation.

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Reporting by Hannah Lang, Gertrude Chavez-Dreyfuss and Nivedita Balu; Editing by Marguerita Choy, Richard Pullin and Richard Chang

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