Musk, who has been a supporter of the cryptocurrency for a while, now purchases it. In billions.
Just In
After several ups and downs, prices of Bitcoin are going up again. On Monday, Bitcoin’s price climbed 20.33% to an all-time high of $46,081.64, logging its best day since March, according to Coin Metrics. At one point, the world’s oldest cryptocurrency even rose above $48,000 on Tuesday.
Why The Rush?
If you look at the surge of a particular stock or a cryptocurrency these days, you would find Elon Musk in the middle of all of it. Musk is also behind the recent Bitcoin rally.
Tesla, the electric car company run by Musk, disclosed on Monday that it had purchased $1.5 billion in Bitcoin for “more flexibility to further diversify and maximize returns on our cash.”. The company also said that it may invest a future portion of its assets in digital assets.
That’s not all. The firm will also be accepting Bitcoin as payment for products “subject to applicable laws and initially on a limited basis.” If Tesla starts accepting payments in Bitcoin, then it will be the first major carmaker to do so.
Apart from Tesla, PayPal recently announced that its customers in the U.S. will be able to buy and sell Bitcoin and other virtual currencies using their PayPal accounts. This opens up new horizons for the cryptocurrency payment market.
The Impact
Tesla buying Bitcoin doesn’t come as a surprise since Musk has been talking up the cryptocurrency as well as meme-inspire token dogecoin in his recent tweets. Many believe that these tweets have driven the recent rally in these assets, writes CNBC. According to WSJ, the recent announcement increased the total market capitalisation of Bitcoin and Tesla by approximately $100 billion on Monday.
Webush analysts Daniel Ives and Ygal Arounian told The Telegraph, “This move could put more momentum into shares of Tesla as more investors start to value the company’s Bitcoin/crypto exposure as part of the overall valuation.”
Zooming Out
This announcement comes after Chinese government regulators on Monday said that Chinese officials have met with Tesla representatives after customers in the country reported battery fires, unexpected acceleration and failing software updates. The officials have urged Tesla to operate according to China’s laws and protect customer rights.
Besides facing trouble in China, Tesla recently has been losing market share in Western Europe to competitors including Volkswagen. So, all might not be well in Musk town, but that shouldn’t make us ignore the fact that Tesla accepting Bitcoin for payment is a huge moment for Bitcoin. Will more companies start accepting cryptocurrencies in the future, or will this move be stopped by regulators before it gets executed? Only the future could answer these questions…
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