Tesla Sells Bitcoin

Market Meditations | July 21, 2022

When Bitcoin was soaring last February, Tesla made the shocking announcement that they had bought $1.5 billion worth of BTC. After selling 10% of their bitcoin, they boosted their earnings for that quarter by $272 million. Fast forward almost a year and a half later, and Tesla has just sold 75% of their remaining BTC balance.

  • Tesla sold $936 million worth of bitcoin, or 75% of its holdings in the second quarter of this year, according to its earnings report. This would equate to selling at an average price of $29,000.
  • Elon Musk says that they sold the majority of their bitcoin in order to “maximize its cash position“ given the uncertainty of the COVID lockdowns in China.
  • The price of bitcoin initially fell 1.7% following the release of the earnings report. Though after the earnings call, bitcoin had retraced back to previous levels.
  • Musk took care to make it clear that Tesla would be open to more bitcoin exposure in the future. It is important to note that Tesla still has $218 million in bitcoin.

While news such as this is sure to drive markets down in the short-term, we must take a step back and realize this news creates reactionary panic. More often than not, the Elon effect remains ephemeral.