Bitcoin briefly falls after Tesla says it sold 75% of its holdings

NEW YORK :Bitcoin stumbled late on Wednesday after Tesla Inc said it had sold about 75 per cent of its purchases of the virtual token.

The world's largest cryptocurrency slid as much as 0.5 per cent to $23,268.92 after the news. It later regained losses and was last up 1.41 per cent at $23,578.75.

Tesla sold $936 million worth of bitcoin in the second quarter, more than a year after it made a $1.5 billion investment during the peak of crypto currency's massive growth and popularity.

The company's Chief Executive Elon Musk has been an outspoken supporter of cryptocurrency. His statements on the future of the crypto space or disclosures about his ownership of digital assets often boost the price of dogecoin and bitcoin.

On Tesla's earnings call, Musk said the primary reason the company sold most of its holdings in bitcoin was due to uncertainty about lockdowns due to COVID-19 in China.

"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," he said.

Musk added that Tesla did not sell any of its dogecoin, a meme-based cryptocurrency that Musk has previously touted.

Tesla accepted bitcoin as a form of payment for less than two months before stopping in May 2021. Musk has said the company could restart accepting bitcoin once it conducts due diligence on the amount of renewable energy to mine the currency.

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