Bitcoin is recovering after falling on news that Tesla sold 75% of its shares

This image taken on October 19, 2021 shows a representation of the virtual cryptocurrency Bitcoin. REUTERS/Edgar Su/File Photo

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NEW YORK, July 20 (Reuters) – Bitcoin rebounded after a brief sell-off late on Wednesday on news that electric car maker Tesla Inc. (TSLA.O) Sold a 75% stake in the virtual token.

Tesla CEO Elon Musk cited concerns about his company’s “gross liquidity” as the reason for the sale.

The world’s largest cryptocurrency rose 1.04% to $23,494.57, before falling 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 in the cryptocurrency at the height of its massive growth and popularity.

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

On Tesla’s earnings call, Musk said the primary reason for sales was uncertainty about the lockdown in China due to COVID-19, which has created manufacturing challenges for the company.

“It’s important for us to grow our cash position,” Musk said. “We are certainly open to increasing our Bitcoin holdings in the future, so this should not be taken as some judgment on Bitcoin. We were concerned about the company’s overall liquidity.”

Musk added that Tesla is not selling any of its Tokai, a token-based cryptocurrency.

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Tesla accepted Bitcoin as payment for less than two months before stopping it in May 2021. Musk said the company may continue to accept bitcoin once due consideration is given to the amount of renewable energy required to mine the currency.

Bitcoin has been in recovery mode so far this week, in line with the stock market, as investors remain more optimistic about the U.S. Federal Reserve’s ability to rein in decades-high inflation.

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

Our Standards: Thomson Reuters Trust Principles.

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