Bitcoin Tops $48,000 Boosted by Tesla’s $1.5bn Investment
09 Feb 2021 · 3rd Party Analysis
- Bitcoin surges 20%, reaching the $48,000 mark
- $1.5bn worth of bitcoin added to Tesla balance sheet
Tesla Adopts BTC
The electric car maker Tesla revealed on Monday that it had invested $1.5bn in bitcoin during January. The news boosted the number one digital asset to a fresh record above $48,000 on Tuesday as cryptocurrency investors and traders rushed to pile onto the coin. Bitcoin rose over 20% following the announcement and has reached a new all-time high of $48,000.
Elon Musk also stated that Tesla is planning to start accepting bitcoin payments for its electric vehicles. Tesla is by far the biggest mainstream firm to endorse the hyper volatile and polarizing cryptocurrency.
The developments highlight even more the process of adoption by large companies and financial institutions. Some of the big names that have already backed bitcoin include PayPal, Square, and MicroStrategy. MicroStrategy, a software firm, has plowed $3bn of its reserves into bitcoin, while Square, a payments company headed by Jack Dorsey, last year announced a $50 million investment in bitcoin. Additionally, more hedge funds and professional investors are opening up to the cryptocurrency market and are considering adding bitcoin to their portfolio.
Tesla Bitcoin Payments on the Horizon
Tesla’s plans to embrace bitcoin and add it to its balance sheet comes less than two months after the company was added to the S&P500. The EV maker said on Monday the investment has been endorsed by the board of directors and represented 11% of Tesla’s cash, net of the $5.6bn of debt.
“We believe our bitcoin holdings are highly liquid. However, digital assets may be subject to volatile market prices, which may be unfavorable at the time when we want or need to liquidate them,” said Tesla in its statement.
Tesla has skyrocketed over 460% in 2020 and nearly 18% so far in 2021. The news yesterday lifted the stock in the premarket higher by 4% but the buying wave subsided and Tesla closed Monday’s session up 1.31% to $863.42. Tesla stock is trading fairly flat in after-hours before the opening of Tuesday’s trading session later today. Bitcoin’s price keeps steady as the news continues to reverberate around the community of crypto enthusiasts, retail traders, and tech-inspired speculators.
Tesla CEO and the world’s second wealthiest man, Elon Musk, has shaken up cryptocurrencies and stocks this year by voicing his opinion on the social media platform Twitter. In the last few days his backing for Dogecoin, expressed in a series of tweets, pushed the meme-coin up over 1000% in less than two weeks. Dogecoin was valued at roughly $900 million around the end of January and is now in the top 10 largest cryptocurrencies, boasting a valuation of over $10bn. Elon Musk promoted bitcoin multiple times, while also contributing to a speculative frenzy in GameStop stock.