Tesla Bought Bitcoin – Elon Musk, the CEO of Tesla, which is valued at over $700 billion, recently announced that it would accept Bitcoin as payment. Musk also announced that the company had used $1.5 billion of its cash reserves to buy Bitcoin. With Musk being one of the most prominent figures globally, what are the implications of this decision to accept BTC payments?
Tesla Bought Bitcoin – Why It Matters
The announcement by Tesla to buy $1.5 billion worth of Bitcoin is significant. Musk, who owns a 20% stake in Tesla, has been a major proponent of crypto. Today, he is considered the richest man on earth. No doubt, any decision he makes has major implications for the world.
While various other corporations in the US have invested in Bitcoin, Tesla is the first company listed on the S&P 500 index to make such an investment. Other firms that have invested in Bitcoin in recent months include Square, which made a $50 million investment in BTC. The other is MicroStrategy, which used $1.3 billion of its cash reserves to purchase BTC. Another example is MassMutual, which bought $100 million worth of the world’s largest digital asset. All of these firms have seen their investment pay off massively as the price of BTC has soared in recent weeks.
Tesla Bought Bitcoin – The Implications
The purchase of BTC by Tesla and the company’s decision to accept Bitcoin for payments could have huge implications. As the world has entered a recession due to the COVID19 pandemic, leading central banks globally have been feverishly printing money.
This behavior has led to speculation over inflation, which could reduce the wealth of many people. Additionally, it could reduce the wealth of nations that hold reserves in USD. Despite this, most major firms around the world still hold their cash reserves in USD. However, various nations globally such as China, Russia, and India have been taking a different route. These nation’s central banks have been gradually growing the gold reserves, in what might be seen as losing faith in the USD.
Elon Musk Influence
With Musk communicating to 40M+ followers daily, it is expected that many first time investors will get involved. Without a doubt, Elon is a prominent figure that people strive to be. Due to his career successes, many investors have an interest in following his long-term visions. It is pretty clear that Musk believed digital currencies will be the future of money.
Tesla’s decision to invest in BTC will not go unnoticed on Wall Street. Whether Wall Street likes it or not, Bitcoin is slowly inching its way into traditional markets. Despite there not being a direct correlation, any pension fund, mutual fund, or other investment vehicles that invest in Tesla will have Bitcoin exposure in a sense. With Tesla deploying $1.5B into Bitcoin, investors should now understand that if you invest in Tesla, you should be bullish on both Tesla and Bitcoin.
Tesla Stock Price Following The Announcement
It will be interesting to follow Tesla’s stock price in the short-term. A day after Tesla announced the Bitcoin investment, shares have tanked ~ 5%. Aside from retail, investors could also get a better idea of Wall Street’s faith in Bitcoin. It is important to note that some of the largest fund companies like Blackrock and Vanguard are top inside holders of Tesla stock. Following Tesla’s insider ownership over the next quarter will be engaging.
Criticism Over The Move
The recent decision by Tesla to purchase large amounts of BTC has not been welcome by everyone. Some have accused the Tesla CEO, Elon Musk, of doing it to raise his own profile. In short, they believe it is nothing more than a publicity stunt that has no direct commercial logic.
Elon Musk has done well for Tesla’s stock thus far. Many have praised him as a visionary, who has taken Tesla to where it is today. It will no doubt be interesting to see how the company’s move to purchase BTC plays out in the future.
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