Bitcoin fell more than 9% on Monday to as low as $42,185, its lowest since Feb. 8, but rallied back to around $45,190 as of 0911 GMT.
Ether, linked to the ethereum blockhain, fell to as low as $3,123.94, and then bounced back to $3,540. Dogecoin fell nearly 7%, and all three are well under recent records.
"A nice pop, but this is small versus the Musk-induced selling that has been taking place lately," said Neil Wilson, chief market analyst at Markets.com. "There is nothing new I can say about bitcoin – volatile, highly speculative, easy to manipulate; a bubble."
Tesla disclosed in February that it had bought $1.5 billion worth of bitcoin in the first quarter. At the end of April, Musk said the company sold 10% of its holdings "to prove liquidity".
Bitcoin, designed as a payment tool, is little used for commerce in major economies, hampered by high volatility and relatively costly transactions.
The most popular digital currency is now down a third from its record high in mid-April and JPMorgan's crunching of fund flow data shows investors exiting positions in recent weeks.
On Wednesday, Musk said Tesla would stop taking bitcoin as payment, owing to environmental concerns about energy use to process transactions. Defending that decision on Sunday, he suggested Tesla may have sold its own holdings.
An unverified Twitter account called @CryptoWhale, said: "Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn't blame him..."
In response, Musk wrote: "Indeed."
It was not clear whether he was confirming sales or whether he referred only to the fact that he had faced criticism, until his clarification in Monday's tweet.
Musk said Tesla would not sell its bitcoin, but the cryptocurrency has dropped by almost a quarter since Musk's reversal on Tesla taking it as payment.
Dogecoin has also yet to fully recover from Musk describing it as a "hustle", although he did boost the price last week by saying he was working to improve its efficiency.
For an asset class that has surged this year, with dogecoin up about a hundredfold, ether up more than fourfold and bitcoin gaining 45%, some are beginning to call time on the wild ride.
"Why would I want to buy bitcoin right now - even if I’m bullish - until the liquidation is over and you see some consolidation in price" said Chris Weston of brokerage Pepperstone in Melbourne.
(Reporting by Tom Westbrook in Singapore, additional reporting by Radhika Anilkumar in Bengaluru, Vidya Ranganathan in Singapore and Thyagaraju Adinarayan in London; Editing by Gerry Doyle, Nick Macfie and Anil D'Silva) ((email@example.com; +65 6973 8284;))