Crypto King Elon? Why did Tesla just invest $1.5 billion into Bitcoin?
On Monday, February 8th 2021, Bitcoin hit an all time high price of $44,211.12, just after Tesla (NASDAQ: TSLA) and CEO Elon Musk announced they purchased $1.5 billion worth of Bitcoin. Was it expected? Maybe. As the tech entrepreneur and CEO has been talking about cryptocurrency such as Dogecoin on Twitter, as well as giving comments about cryptocurrency in recent news appearances.
In a filing reported on Monday, the car company Tesla (NASDAQ: TSLA) reported their conversion of $1.5 billion USD into Bitcoin some time in January. The cause, is an investment strategy done by the car company where funds not needed for maintenance costs are to be converted to benefit in the long-term. This is the first step of many Tesla plans to take in maintaining and holding digital assets such as Bitcoin to help them down the road.
More importantly, the investment in Bitcoin done by Tesla (NASDAQ: TSLA), is a potential opportunity to allow for Tesla (NASDAQ: TSLA) to accept Bitcoin and other cryptocurrencies as payment methods to purchase vehicles. However, Tesla (NASDAQ: TSLA) is unsure about how they may approach the liquidation aspect of Bitcoin as it is subject to governing laws.
That doesn’t seem like too big of a problem for Tesla (NASDAQ: TSLA) to handle, but what happens if Bitcoin falls? Will Tesla (NASDAQ: TSLA) pull pump and dump schemes to keep the price of Bitcoin inflated to their favour, or will Elon Musk produce more tweets to drive investors towards cryptocurrency.
The recent tweets made by Elon Musk about Dogecoin caused an overall spike in the currency of about 50% on February 4th 2021. All with the power of meme comments and by mentioning Dogecoin here and there caused a very high trading price for Dogecoin compared to what it was at before. Not only Elon Musk, but Mark Cuban as well are targeting Dogecoin. Now with Tesla (NASDAQ: TSLA) targeting Bitcoin, the spike and interest in cryptocurrency continues.
Bitcoin jumped around 9% to more than $43,500 USD because of the announcement Tesla (NASDAQ: TSLA) made, bringing more hunger investors to follow the footsteps of successful companies and CEOs.
The main reason many cryptocurrency enthusiasts are inclined now compared to before and the reasoning as to why currencies such as Bitcoin have been rising is because of the actions done by governments across the globe who have dumped large amount of borrowed money to stimulate the economy, due to COVID-19. Thus, raising the speculation of inflation which will have a negative impact towards North American currencies such as U.S and Canadian dollars, being undervalued.
Tesla itself has spiked over 500% over the last year making Tesla (NASDAQ: TSLA) the fifth most valuable company in the United States, and by making Elon Musk the world’s richest person.
One week ago Elon Musk stated that Bitcoin was on the verge of being more acceptable amongst investors and was beginning to dive deep into inquiring about the capability of large transactions being done on via Bitcoin. By changing his bio on Twitter to include #bitcoin, was a bigger hint as well.
Now everyone is curious on betting with Bitcoin as the successful car company and CEO have both made big moves to secure the currency. Adding Bitcoin either indirectly or directly can be beneficial as the price continues to strengthen.
What are your thoughts? Would you buy Bitcoin? Is Elon Musk going crypto crazy?
Written By: Aneeshan Balakaran, Karthik Ganapathiraju, and Wil Peters