Elon Musk’s Tesla purchased $1.5 billion in Bitcoin earlier this month, announcing that it intends to start accepting the cryptocurrency as payment in the future. This announcement caused the price of Bitcoin to jump 17% to $44,220, its record high.
This is the first time that Musk has caused a spike in the investment of the currency, with his past posts on Twitter, that have since been deleted, having an effect on the market.
Earlier in 2021 Bitcoin’s value hit over $40,000 for the first time, with the rise being attributed to interest from big investors seeking quick profits. However, the value almost immediately dropped after a mass sell-off of the currency from long-term whales. Over the past few years, Bitcoin has seen a considerable rise in popularity, and can now be used to purchase a variety of things – including sales at websites such as Amazon where its purchase power can even buy groceries. Despite being an incredibly volatile market, the popularity of crypto as an alternative to traditional fiat currency is growing, as is the convenience and ease of spending them.
Many think that Tesla’s investment is a “game-changer” for the Bitcoin, as it is the first major company in the automobile sector to announce its intentions to offer cryptocurrency as a future payment option.
“Tesla is hardly considered a traditional company, but when one of the largest companies in the world starts to hold Bitcoin on its balance sheet as a substitute for cash, the market takes notice,” Paul Hickey of Bespoke Investment Group wrote in a note to clients.
Hector McNeil, spokesperson for BTCetc Bitcoin Exchange Traded Crypto added: “Tesla’s purchase of Bitcoin is yet another huge endorsement for the cryptocurrency from a large corporate or institutional investor. They tend to take a much longer-term view of their investments than retail investors, and this bodes well for the future valuation of the cryptocurrency.”
However there is still concern about the volatility of the market with Neil Wilson, chief market analyst for Martkets.com telling BBC News, “Tesla is now starting to take on a big [foreign exchange] risk – this may not worry a lot of investors, but some conservative types might be concerned.”