Description:

Bitcoin recovered from a brief sell-off late Wednesday, prompted by news that electric car manufacturer Tesla Inc had sold roughly 75% of its holdings of the virtual token.

Tesla CEO Elon Musk stated that the sale was motivated by fears about his firm"s "overall liquidity."

After falling as much as 0.5 percent to $23,268.92 on the news, the world"s largest crypto was last up 1.04 percent at $23,494.57.

Tesla sold $936 million in bitcoin in the second half, more than a year after purchasing $1.5 billion in bitcoin at the peak of its huge growth and popularity.

Musk has been a vocal proponent of cryptocurrencies. His predictions about the future of crypto, as well as his disclosure requirements about his ownership of digital assets, frequently boost the price of dogecoin and bitcoin.

Musk stated on Tesla"s earnings call that the primary reason for the sale was ambiguity about COVID-19 lockdowns in China, which have invented production challenges for the company.

"We needed to maximise our cash position," Musk explained. "We are open to expanding our bitcoin holdings in the future, so it should not be interpreted as a verdict on bitcoin. It"s just that we were particularly worried about the company"s overall liquidity."

Musk also stated that Tesla didn"t even sell any of its dogecoin, a meme-based cryptocurrency he has promoted.

Tesla accepted bitcoin for less than two months before discontinuing it in May 2021. Musk has stated that the company may resume accepting bitcoin after conducting research into the generation of renewable energy required to mine the currency.

Bitcoin has been recovering along with the stock market this week, as investors become more confident in the ability of the United States Federal Reserve to rein in decades of high inflation.