Words by Matteo Marchionni
The price of bitcoin hit a new all-time high of $48,000 following Tesla’s announcement that it purchased $1.5 billion of the cryptocurrency.
Monday 8th, Elon Musk’s Tesla filed its documents to the U.S. Securities and Exchange Commission (SEC), which revealed the company had invested an amount equivalent to $1.5 billion in bitcoin during January.
The document also states that customers will soon be able to purchase the company’s electric vehicles with the cryptocurrency: “we expect to begin accepting bitcoin as a form of payment for our products in the near future”.
These announcements led many investors to rush into the asset, which in turn led to a spike in bitcoin’s price in a matter of hours, from about $39,000 to a new all-time high of $48,000.
The transaction is part of Tesla’s new 2021 investment policy aimed at diversifying and maximising its returns on investments. Spreading one’s wealth across various assets is common financial practice, but its adoption has gained increased popularity over the last year.
This is partly due to the dollar’s decrease in value during the last several months, to a large extent a consequence of the Federal Reserve’s policy to print new money in order to sustain the economy during the Covid-19 outbreak.
The latest example of this occurred last week when the U.S. Senate approved Biden’s $1.9 trillion rescue bill. The latter was immediately followed by a slight decrease of the American currency’s value coinciding with a small surge in bitcoin’s price, as investors speculated inflation in the near future.
More good news for bitcoin came in the following days of Tesla’s announcement, which actually led the cryptocurrency’s value to surpass by just a slight margin the record hit on Monday.
On Wednesday, the financial service corporation Mastercard communicated that it will begin accepting cryptocurrency payments later this year, following its competitors Visa and Paypal in this approach.
On Thursday, Nigerian Senator Sani Musa said: “Cryptocurrency has become a worldwide transaction of which you cannot even identify who owns what. The technology is so strong that I don’t see the kind of regulation that we can do. Bitcoin has made our currency almost useless or valueless.”
Following Monday’s price increase, businessman Michael Novogratz stated that he expects bitcoin to reach up to $100,000 by the end of this year if other big-name firms follow Tesla’s footsteps.
Other major companies have already pursued Tesla’s same avenue, including MicroStrategy Inc. and Square Inc., but most firms remain sceptical about investing into the asset principally due to its high volatility.
Furthermore, some such as UBS Wealth Management strategist Kiran Ganesh, regard bitcoin as a bubble, arguing that the asset’s value is in reality equal to zero. But for the time being, thanks also to Tesla, the cryptocurrency is doing better than ever, and it is likely that its maximum value is yet to be reached.
Picture Credit: QuoteInspector