Elon Musk‘s company, Tesla, has confirmed that it bought $1.5 billion of the cryptocurrency Bitcoin last month, and has revealed plans of accepting it as a payment option in the future.
Upon breaking the news, the market saw the price of BTC soar to new all-time highs of around $44,000 (at that time) – an increase of around 14%.
The company revealed that the mass purchase of Bitcoin was a strategic investment in order for Tesla to maximize its returns on cash that’s not being used in the day-to-day running of the business.
(Image: CoinGecko)
The news also came days after Elon Musk added #bitcoin’ to his Twitter profile page, helping to propel the price higher in the short term.
Musk has been a vocal supporter of cryptocurrencies in the past and clearly ramped up his enthusiasm for assets like Bitcoin and meme-based currency Dogecoin in early 2021, repeatedly tweeting jokes and statuses surrounding the Shiba-themed cryptocurrency in particular.
Driving Mass Adoption
The huge investment of Tesla into Bitcoin is likely to be a move that reassures crypto traders around the world in that the industry giants led by the world’s richest man is choosing Bitcoin to grow its wealth.
Tesla anticipates that Bitcoin’s recent succession of new all-time highs is just a sign of the cryptocurrency getting started, with higher values on the horizon for the coin.
However, despite the astronomical figure propelling Bitcoin forwards in the short term, Tesla’s $1.5bn investment may not be the most pivotal aspect of Elon Musk’s latest foray into the world of crypto. The fact that the automotive giants have also announced that the company plans to accept Bitcoin payments in the future may well be a watershed moment for the future of cryptocurrency adoption.
In accepting BTC payments, Tesla has announced itself as one of the first major companies in the world to accommodate cryptocurrency in a practical sense as well as a form of investment.
With the hope of more companies following in the footsteps of Tesla, we may soon see Bitcoin being converted into a practical cryptocurrency where users can feasibly use blockchain wallets to go out and buy groceries in a brick and mortar store.
Although the future of using cryptocurrencies in daily life is likely to be far away from becoming a reality, the possibility of using digital coins to buy cars with Bitcoin is certainly a step in the right direction. Maybe in no so distant future, we’ll potentially witness Bitcoin being adopted in various other industries, including sports and wellness, car insurance, private healthcare, and other B2C and B2B services.
Tesla’s accommodation of Bitcoin follows on from PayPal’s announcement in late 2020 that the leading payment services provider has also begun to adopt Bitcoin spending.
Appealing to a New Generation of User
The seismic $1.5 billion Tesla investment in crypto has come in the wake of widespread dissatisfaction at stock market investing.
Following the Reddit-sourced pumping of GameStop shares in late January, Musk appeared to tweet his support for the movement in referencing the group that kicked it all off, r/WallStreetBets.
(Image: Twitter)
In the days following the event, as news of investment app, Robinhood, restricting the accounts of users who had bought GameStop shares, Musk appeared to show his support for investors transitioning away from stocks and towards decentralized cryptocurrencies that weren’t bound by central influence.
Musk made his support for Dogecoin clear in particular, as WallStreetBets abandoned Robinhood to seek out alternative investment apps that incorporated cryptocurrencies into their offerings as well as traditional stocks and shares.
Buoyed by both Musk’s and Reddit’s support, Dogecoin rallied to two-week highs of over 800%, driving DOGE to its all-time high value of $0.08 US dollars.
Elon Musk appears to be using his platform to encourage investment into cryptocurrency among younger investors through the medium of memes and viral jokes. While Tesla joins a long line of whale investors looking to safeguard their wealth in a digital appreciating asset, Musk appears to have plans for wider adoption among everyday users.
The influx of investors disenfranchised by the Robinhood fiasco may be soon joined by other individuals lured in by the prospect of buying a Tesla with their Bitcoin savings. In a cryptocurrency market that’s recently been dominated by institutional investors, Musk’s efforts to bring cryptocurrency to the masses may prove to be more valuable than Tesla’s $1.5 billion dollar pump.
