Crypto
Tesla buys $1.5 billion in Bitcoin and the crypto surpasses $45,000
Tesla’s move to Bitcoin represents an investment of a significant percentage of its cash. The company had more than $19 billion in cash and cash equivalents on hand at the end of 2020, according to its most recent filing. Two weeks ago, the billionaire Tesla founder added the hashtag #bitcoin to his Twitter bio, in a move that helped push up the price of the cryptocurrency by as much as 20%.
Tesla just announced the purchase of $1.5 billion in Bitcoins. In a 10-K filing with the U.S. Securities and Exchange Commission, the company said it bought the Bitcoins to “have the flexibility to further diversify and maximize returns on our cash.”
Tesla also said it would begin accepting payments in Bitcoins in exchange for its e-cars. That would make it the first major automaker to accept it.
It should be clarified that the $1.5 billion in Bitcoins will give Tesla liquidity in the cryptocurrency once it starts accepting it for payments.
The company explained that “as part of the policy, a portion of such cash may be invested in certain specified alternative reserve assets.”
Thus, Elon Musk (whom some compare to a sort of King Midas, the Greek figure who turned everything into gold) assigned to Bitcoin the three classic functions of a currency: means of payment, store of value and unit of account. It is not yet a full reality in any respect, but there is no doubt that it is coming.
“I think we’ll see an acceleration of companies looking to allocate resources to bitcoin now that Tesla has made the first move,” said Eric Turner, vice president of market intelligence at cryptocurrency consultancy Messari. “One of the largest companies in the world now owns bitcoins and, by extension, all investors who own Tesla, also have exposure,” he added.
“It generates positive sentiment for Bitcoin, but this rise is the realization of a technical development that was already predicted on the charts. I don’t think it makes much difference,” commented financial analyst Carlos Maslatón, in statements quoted by La Nación.
Read more on the subject and find other interesting business news with the Born2Invest mobile app.
In figures
Tesla’s move to Bitcoin represents an investment of a significant percentage of its cash. The company had more than $19 billion in cash and cash equivalents on hand at the end of 2020, according to its most recent filing.
Between the lines
The moves raised immediate questions about the CEO’s behavior on Twitter in recent weeks, where he is credited with driving up the prices of cryptocurrencies such as Bitcoin and Dogecoin by posting positive messages that encouraged more people to buy the digital coins.
Two weeks ago, the billionaire Tesla founder added the hashtag #bitcoin to his Twitter bio, in a move that helped push up the price of the cryptocurrency by as much as 20%.
His “Midas effect” extends to other sectors. His famous “Use Signal” replacement for WhatsApp generated record downloads of the messaging app (while others downloaded an app with a similar name, by mistake).
Bitcoin prices surged to new highs on Monday after Tesla’s announcement and by midnight were trading at US$45,000, +20% in 24 hours. However, it peaked at US$ 47,000.
Background
Musk was known to get in trouble for the impact of his Twitter statements on market movements, but it is unclear how that applies to his tweets about cryptocurrencies. Notably, the SEC charged Musk with fraud in 2018 for his tweets about taking the company private at $420 per share.
Musk eventually settled with the SEC and was forced to step down as chairman of the company’s board of directors and pay a $20 million fine, plus another US$ 20 million fine for the company itself.
__
(Featured image by Crypto Crow via Pexels)
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in ElEconomista, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
-
Crowdfunding2 weeks ago
Municipal Crowdfunding Breaks the 10 Million Euro Barrier in Germany and Austria
-
Business6 days ago
TopRanked.io Weekly Affiliate Digest: What’s Hot in Affiliate Marketing [KuCoin Affiliates Review]
-
Cannabis1 week ago
On November 7th, the Sejm Comitee Will Consider the Bill to Decriminalize Cannabis in Poland
-
Africa1 day ago
Burkina and ROSATOM Experts Discuss Nuclear Power Infrastructure