Another day, another bit coin related news. I guess people can’t get enough about the booming status of this crypto economy. I’m not sure about you guys but crypto currency has been a trend for quite a while and I even remember reading about bit coin specifically all the way back in 2017.
Bit coin is actually one of the few popular types of cryptocurrencies available and on 8th February, it had skyrocketed in the mainstream acceptance and the person to perhaps credit or blame it on is the one and only Elon Musk of Tesla Inc.
It has been revealed that Tesla Inc had purchased US$1.5 billion (RM6.09 billion) of the cryptocurrency and revealed that they will accept payment for their cars via the cryptocurrency. With this as an offer, there is a likelihood that the currency will skyrocket more.
If anyone actually read through Tesla’s annual report from 2020, it states that the announcement was written there, and it had drove a 13% surge in the currency which is around US$43,000. With the current price of bitcoin, you could purchase an entry-level Tesla Model 3 with only 0.88 bitcoin!
It’s been predicted that other companies might soon join in a list of firms that invest in bitcoin. Musk has also upended Wall Street over the last year as he had briefly became the world’s richest person when Tesla surged nearly 500% and became the 5th most valuable company in the United States.
“If any lesser mortals had made the decision to put part of their balance sheet in Bitcoin, I don't think it would have been taken seriously,” said Thomas Hayes, managing member at Great Hill Capital LLC in New York. “But when the richest man in the world does it, everyone has to take a second look.”
With Musk buying the currency, it even generated discussions on Reddit. Although cryptocurrencies are banned on WallStreetBets after the GameStop Corp trading frenzy, other subreddits are expecting more companies to follow suit after Tesla.
Musk has became a regular as well on the past month in support of the cryptocurrencies as he too tweets about them. Due to his tweets, it had also driven up the price of meme-based digital currency Dogecoin and shares of GameStop!
Well played Elon Musk.
If one never noticed the subtle hints, Musk first started out by asking if it was possible to do large transactions with the currency back in December. He later changed his twitter bio to include #bitcoin back in late January and a week ago, he tweeted that bit coin was “on the verge” hence the recent skyrocket.
The current worth of Bitcoin in the market compared to a year ago.
Tesla is reported to move 8% of their reserve money into bitcoin as a broad investment policy to maximize its returns in cash and gold. The end of the report mentions that Tesla ended 2020 with US19.38 billion in cash and cash equivalents.
“We expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt,” the company said.
So, what is the long-term store of value?
Banks have remain skeptical of digital currencies, but analysts say the more real world uses appear more for bitcoin users. It is more attractive than other available cryptocurrencies and proves itself as a long-term store of value.
Bitcoin surged nearly 14 per cent to a record high of US$43,625 after Tesla's disclosure.
“The argument for bitcoin is evolving. It used to be negative (reasons to buy), but suddenly there are positive reasons, and that's why you see bitcoin at (new highs),” Mohamed El-Erian, chief economic adviser of Allianz, told CNBC.
Tesla is one of the few companies who also added bitcoin to their corporate treasury, Other companies such as Square, a payment company led by Twitter Inc chief Jack Dorsey. Apple Inc is also predicted to become the next big company to enter cryptocurrency as they could use the currency to be exchanged via their Apple Wallet service.
Mitch Stevens, an analyst at RBC Capital Markets says that the firm could benefit and gain market share in the industry if they allow bitcoin exchange and it will also push the price up higher.
Tesla's move to put some of its corporate reserves in bitcoin may be a signal that it expects the cryptocurrency will emerge as another store of long-term value alongside the dollar and gold, said Graham Tanaka, president and chief investment officer of Tanaka Capital Management in New York.
“Companies are very careful when it comes down to their reserves,” he said. “This doesn't appear to be a flash in the pan. It appears to be something that may be a fundamental change.”
So, what do you think our fellow readers? Will bitcoin continue blowing up? Maybe it’s time to invest into cryptocurrencies (if we have the money).
If you do hit big, especially if you invested in the Dogecoin, don’t forget to thank Elon Musk.
Also, to those who make it big, don't end up making a video like Nam Do San from the Kdrama series, Start Up.