Bitcoin Keeps Hitting New High After Tesla Backing

0
484
Bitcoin

The giant tech company Tesla recently opted to buy Bitcoin for a total of $1.5B dollars. The company announced the transaction in a filing with the SEC, stating that the move would give them more flexibility and maximize returns.

Plus, the company stated that it will start accepting bitcoin payments for their product, which eventually will give them more liquidity in the cryptocurrency.

The market reacted accordingly, with bitcoin’s price hitting a historical $47,000+ per coin. Consequently, traders and hodlers have been forecasting positive price predictions as BTC keeps coming close to the $50,000 mark.

Tesla, Inc. – A Little Bit of History

With a colossal $800 billion market capitalization, Tesla, Inc. is a company specialized in electric cars and alternative energy products.

Founded in 2003 as Tesla Motors, the company is always associated with Elon Musk, co-founder and current CEO. The purpose of Tesla is to accelerate the transition to sustainable energy, reducing CO2 emissions, and combating global warming.

Single-handedly, Tesla has “forced” the whole automotive industry to rethink the way vehicles are manufactured.

For instance, it would be impossible to think about automobile giants such as GM and Toyota planning to completely switch to electric vehicles. Hence, Tesla has solidified the concept that the electric way is the future’s way.

It is not the only occasion in which Elon Musk’s Twitter has caused reactions in the bitcoin market. On January 29, 2021, Tesla’s CEO – Elon Musk – put the hashtag #bitcoin in Twitter bio, which made the BTC price to skyrocket.

See also  Forever 21 May Be Filing For Bankruptcy

Why did Tesla Buy Bitcoin?

Even though it is impossible to define what is the specific reason behind Tesla’s investment, experts and market analysts have shared interesting insights about the colossal volume of bitcoin acquired by the company.

Firstly, bitcoin is an extremely valuable asset that offers many advantages. Even though this observation may seem obvious, many industry-leading companies and investors insist to ignore the potential of cryptocurrencies, flagging it as a “bubble”.

Tesla is extremely disruptive in the automobile sector, in the same manner, bitcoin is extremely disruptive to TradFi and centralized finance.

The company believes in a future world where people will have financial freedom over their holdings, without the need to rely on banks or intermediaries. Being the world’s most valuable cryptocurrency, bitcoin has a crucial role in the future’s finance industry.

In a world without banks and powered by decentralized trading and blockchain-based applications, people will be able to send bitcoin around the world through borderless transactions, without being tied to governments or bureaucracy.

Bitcoin vs Fiat Currency

Even though most economists are still regarding the US dollar as the world’s most powerful reserve of value, the currency loses a small percentage of its buying power yearly. But why? The simple answer is inflation.

On the contrary, Bitcoin is an incredibly scarce asset, as only 21 million BTC can ever be created. Hence, its purchasing power increases over time, unlike fiat currency.

It is good to notice that bitcoin was originally conceived as a response to the excessive monetary policy in the 2008 market crisis.

With the ever-growing number of people unsatisfied with banks and Wall Street, Satoshi’s whitepaper came as an alternative solution for all the chaos created by TradFi’s control concentration and lack of transparency.

See also  Top Small Scale Business Ideas 2020

How the Mainstream Media Reacted

The mainstream media did not react well to Tesla’s decision to bet on bitcoin. Many websites and journalists accused the company of creating alternative energy solutions but investing in “dirty bitcoin”.

The reason behind the accusations is that the mining of bitcoin requires large amounts of electric energy, which harms the environment.

The fact that the mainstream media insists to ignore is that the banking system consumes more than 10 times more energy than bitcoin mining worldwide.

Unfortunately, the negative press around the fact affected the way investment markets look at the company. Recently, Tesla’s net value fell $44 billion in a period of 24 hours between February 22 and February 23.

Experts believe that the decline was fueled by Tesla’s CEO comments regarding the prices of Bitcoin and Ethereum.  Just two weeks after Tesla added $1.5 billion worth of Bitcoin in its portfolio, Musk used his Twitter account on February 20 to tweet that “BTC and ETH do seem high”.

Final Thoughts

The recent acquisition of $1.5 billion worth of Bitcoin made by Tesla pushed the cryptocurrency price to its all-time high – a colossal +$47,000.

The company’s CEO, Elon Musk, is known as an open enthusiast of cryptocurrencies and helped to drive the popularity of alternative finance further at the mainstream level.

Investors and experts in the crypto industry believe that this type of approach will help to accelerate the popularization of bitcoin among industry-leading players.

LEAVE A REPLY

Please enter your comment!
Please enter your name here