Tesla dumps $936M worth of Bitcoin – what’s ahead for BTC price?

YEREVAN(CoinChapter.com) – Tesla announced late on July 20 that the company had sold 75% of its Bitcoin (BTC) holdings in Q2, which amounted to $936 million. In 2021, Tesla spent $1.5 billion on the flagship cryptocurrency, in an unprecedented move for a firm its size.

Poor Chinese sales behind the decision

Tesla CEO Elon Musk said uncertainties around Covid-19 restrictions in China prompted them to sell their BTC holdings. In detail, a new lockdown in Shanghai limited Tesla’s vehicle production at its factory there, cutting its overall sales for the quarter.

We were uncertain as to when the Covid lockdowns in China would alleviate, so it was important for us to maximize our cash position. We are certainly open to increasing our bitcoin holdings in the future, so this should not be taken as some verdict on bitcoin.

stated Musk.

Also read: Bitcoin Price Signals Crucial Breakout, Why BTC Could Rally To $24.5K. 

Moreover, crypto analyst CryptoKaleo estimated that the company sold its digital assets at a nearly 9% discount, compared to the average entry price of over $31,600.

Tesla gets mixed reactions.

The Twitter response to the news was massive, with posts ranging from ‘devastated’ to ‘amused.’ Crypto analyst Will Clemente called the announcement a “nothingburger.”

CryptoKaleo summed up the disturbance quite nicely, poking fun at the over-the-top reactions.

Also read: Inflation at 9.1% deflates Bitcoin’s recovery hopes – what to expect?

While Musk claimed the BTC dump was not to be viewed as a “verdict” on Bitcoin, the price slumped 6% since the press release and stood at just under $23,000 on July 21.

BTC slides below $23K

Bitcoin traded at $22,800 in the Asian-Pacific session after a week-long rally that took BTC’s price up by over 25%. However, a closer look at the daily chart showed that the digital asset retested a previous resistance level.

If the downtrend continues, BTC will likely revisit the Bear Flag setup, relevant since mid-June. The formation features a period of consolidation within two parallel trendlines. Then, they take the asset value slightly higher before reestablishing a bearish vector.

Also read: Gold struggles at $1.7K, Bitcoin at $20K — no safe haven. 

Meanwhile, Bear Flag’s target price equals the drop preceding the setup, i.e., $12,000 for BTC, or another 47% decline.

The news of Tesla selling their Bitcoin had an obvious negative impact on BTC. However, the preceding rally did not have any major macroeconomic event behind it. Thus, it seems logical that the uptrend was a dead cat bounce in the current bearish market.