Tesla dumped a big chunk of its bitcoin holdings. Should you?

New York (CNN Business)Bitcoin prices were cooling off Thursday following a big spike in the past week. And it appears Elon Musk might be partly to blame.

The price of one bitcoin fell 3% Thursday to about $23,000 after Tesla (TSLA) disclosed in its latest earnings report Wednesday that it sold about 75% of its bitcoin holdings during the second quarter to raise cash.

“The reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the Covid lockdowns in China would alleviate,” Musk said on an earnings call with analysts Wednesday evening. “So it was important for us to maximize our cash position.”

But is the change in Tesla’s bitcoin stance really a reason to dump crypto — or just a convenient excuse after a nice little rally?

Bitcoin prices, which have been more than cut in half this year, have enjoyed a solid rebound in the past week, gaining 12% in the past seven days. Other cryptos, such as ethereum and solana, have surged even more dramatically. What’s more, Musk made clear that Tesla isn’t abandoning crypto.

“We are certainly open to increasing our bitcoin holdings in future, so this should not be taken as some verdict on bitcoin,” Musk said during the call with analysts. “It’s just that we were concerned about overall liquidity for the company.” He also noted that Tesla has not sold any of its holdings in meme cryptocurrency dogecoin.

But some analysts wondered if other big investors will use Tesla’s bitcoin sale as justification to unload some of their cryptocurrency holdings as well.

“The Tesla sell-off can trigger a new wave of related dumping from corporate bitcoin holders, most of which might also be distressed by the ongoing global economic downturn,” Andrey Diyakonov, chief commercial officer at Choise.com, a crypto wallet firm, said in an email to CNN Business. “While this is speculation, investors are likely to begin factoring in this possibility moving forward, a move that is bound to reflect in the long-term performance.”Enter your email to subscribe to the CNN Business Newsletter.

Software company MicroStrategy (MSTR) owns a big amount of bitcoin, for example. But CEO Michael Saylor has continued to tout bitcoin on his Twitter feed — even as MicroStrategy’s stock has plunged nearly 50% this year. Square owner Block (SQ), run by Jack Dorsey, also owns bitcoin.

Others pointed out that Musk, like it or not, can move markets.

“Traders should not be surprised that Musk supported Tesla’s selling of bitcoin, as the crypto winter was clearly in place and as the balance sheet needed to be strengthened,” Edward Moya, senior market analyst for the Americas at OANDA, a foreign exchange trading company, said in a report.

“Tesla dumping a good portion of their bitcoin holding news caught many off guard and helped end the rally,” Moya added. “This is not a game changer for bitcoin, but it unsettled a good portion of the avid social media followers.”

It’s also worth remembering that bitcoin prices rise and fall for many reasons that have nothing to do with the world’s richest person.

“Macro factors are having a bigger role in bitcoin’s price, such as Fed rate hike decisions and inflation,” Chris Kline, co-founder of Bitcoin IRA, a digital asset technology platform, said in an email to CNN Business.

“Larger institutions moving into the arena are affecting the price action of bitcoin, which is why this current crypto winter is different from previous ones” Kline added. “Major institutions have adopted crypto in some form and it’s playing a factor in the volatility we’ve seen recently.”

For more information please visit: www.edition.cnn.com 

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