Tesla’s (NASDAQ: TSLA) announcement that it will accept Bitcoin as a payment form will likely be a game-changer for the cryptocurrency which has previously experienced high levels of volatility. The EV maker confirmed that the decision to invest $1.5 billion in Bitcoin was part of its broader investment policy aimed at not only diversifying the company’s assets but also maximizing returns on cash.
Bitcoin has reached new record highs in recent months by breaking the $30,000 ceiling after a rollercoaster ride over the last few years. Major financial institutions backing the coin — such as Blackrock changing several investment mandates to allow some of its funds to invest in Bitcoin — have also encouraged the upward trend. However, central banks remain skeptical about the legitimacy of cryptocurrencies in general.
Tesla bets big on Bitcoin
CEO of Tesla Elon Musk has been a well-known supporter of Bitcoin, he even added #Bitcoin to his Twitter bio last month. Back in December, Tesla’s leader also asked if it was possible to make a large transaction in Bitcoin. Musk also referenced Bitcoin just last week by citing that the coin was “on the verge” of becoming more widely acceptable amongst investors.
The issue of market manipulation has also creeped up recently as Musk must be aware of the power he holds in influencing people to invest in companies. His legitimacy in supporting cryptocurrencies was also questioned last week when he publicly backed Dogecoin, a crypto which was made as a sarcastic critique of the 2013 crypto market.
Lately, the tech tycoon has been voicing a lot of his opinions on retail investment fueled stocks. GameStop stock jumped 157% the day after Musk tweeted ‘Gamestonk!!!’ and he pushed meme-centric currency Dogecoin up 60% within minutes of him tweeting a cartoon picture of him holding up the logo of the cryptocurrency.
Vice president of market intelligence at cryptocurrency research firm Messari Eric Turner commented on the announcement:
“One of the largest companies in the world now owns Bitcoin and by extension, every investor that owns Tesla (or even just an S&P 500 fund) has exposure to it as well.”
The report comes at a critical time in the cryptocurrency market as the legitimacy of alternative payments are being widely debated. Musk’s legion of followers investing in anything he promotes might have been seen as harmless behaviour, but if the CEO continues to back investments that he can financially gain from he may get himself into some trouble over market manipulation concerns.
Tesla has made the first big move in declaring it will accept the cryptocurrency as payments for its vehicles and other products. Now it might not be long until other companies start following suit.
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Content Writer at MyWallSt
Nicole's favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.