Tesla sent shockwaves across the crypto world late Wednesday after revealing that it had reduced its bitcoin position by 75% in Q2. Elon Musk explained that the sale was due to liquidity concerns triggered by the lockdowns in China.
Nonetheless, Tron blockchain creator Justin Sun spotted a much-needed silver lining to glean from Tesla’s shocking capitulation.
Why Tesla’s Sell-Off Is Good News For BTC
Tesla’s sale of $936 million worth of bitcoin delivered a blow to investors, but not all crypto executives are shuddering.
According to Justin Sun, the market no longer needs to worry about Tesla dumping BTC — which is something that has lingered within the crypto space for quite a long time. To put it differently, now the company cannot sell its bitcoin again, and more reliable market actors have acquired it.
Sun further indicated that the EV giant selling bitcoin worth nearly $1 billion demonstrates the benchmark crypto’s liquidity to major corporations.
Additionally, Tesla’s completed BTC transactions set a clear precedent for all companies holding the cryptocurrency on their balance sheets. This could undoubtedly encourage more big corporations to purchase crypto assets in the future, the controversial crypto entrepreneur postulated.
For Changpeng Zhao, the CEO of the world’s largest cryptocurrency exchange Binance, at least $100 billion worth of BTC is traded daily. That said, “someone selling $1 billion is a drop in the ocean”.
It’s worth mentioning that bitcoin endured a drastic fall in the second quarter. It dropped from around $50,000 to sub-$20,000 between March 31 and June 30, implying that Tesla may have sold its stash at a loss.
After printing a six-week high of around $24,200 on Wednesday, Bitcoin has recoiled below $23K today following the Tesla dumping news and the European Central Bank (ECB) raising interest rates for the first time in 11 years.
The big question is whether this shock is already internalized into crypto prices or if there’s a risk of a continued cascading sell-off. Musk is not completely closing the door on bitcoin despite the paper hands. The centibillionaire said Tesla might increase its coin holdings in the future.