For several months, Elon Musk has been a "meme" about cryptocurrency. Musk charged DogeCoin (DOGE) with a three-digit pump last week and over the weekend. Along with tons of tweets about cryptocurrency. In the past few months, Elon has described herself as "the former CEO of DogeCoin", and there are more and more comic tweets about DOGE, Bitcoin and cryptocurrencies.
Bitcoin is my safe word
-Elon Musk (Elon Musk) March 20, 2020
Although Musk's tweets on cryptographic topics weren't really serious, the crypto community took this joke as an important sign that Musk knows about minimal cryptography. Interest in this. Ultimately, one of Elon's cryptocurrency tweets discussed converting Tesla's balance sheet into holdings of BTC with crypto investor Michael Sailor.
Is such a big deal possible?
-Elon Musk (Elon Musk) March 20, 2020
However, for many, Elon's interest in cryptocurrencies seemed rather light and mostly memes-oriented. However, until yesterday Tesla officially announced that it had invested $ 1.5 billion in Bitcoin. , Plans to accept BTC in exchange for goods.
Daniel Polotsky, CEO and Founder of CoinFlip, told Finance Magnates that many in the cryptocurrency community believe it is "a matter of time before [Elon Musk] or Tesla becomes popular as a cryptocurrency."
“It looks like the size of the investment comes from the companies behind the richest in the world,” Polotsky says.
Since the announcement, Tesla BTC has reached nearly $ 48 000.
Most of the crypto industry analysts seem to agree with this. This is great news.
“This moment will be considered a real turning point in the coming years,” said Dermot O'Riordan, partner at Eden Block, a private equity firm specializing in blockchain. Business insider“. The backing of Elon and Tesla will legalize cryptocurrency and open up Bitcoin to a whole new class of retail and institutional investors. Now it seems that all of Wall Street is connected to this industry. If you didn't pay attention before, now it is".
Indeed, the news that Tesla acquired for Bitcoin immediately made headlines in several of the world's most popular news outlets. So, money started to flow into the cryptocurrency market, especially bitcoin.
Coinstream CEO and Founder Michael Vogel said: Financial tycoon "The already exciting cryptocurrency market, which is showing bullish gains, has hit a record high for Tesla News, raising over $ 47,000 per bitcoin".
Many analysts noted that Tesla's announcement of an investment in BTC may have already generated significant cash for the company. Assuming Tesla bought Bitcoin at $ 3,847,000 per household (most of the month 20), raising to $ 1.8 million would increase its asset value by more than 10%, bringing the total investment to over $ 1 billion.
"A lot of people expect this to spark a wave of corporate money"
Like O'Riordan, Vogel notes that institutional investors who could have previously been fenced off may have seen Tesla's investment as a kind of turning point. Tesla is moving with precedent. In a sense, this is “licensing” another CFO to conveniently store bitcoins on the corporate balance sheet.
In fact, a large company that may have been on the verge of whether or not to penetrate bitcoin could take Tesla as an example.
Luke Sully, CEO of Digital Asset Finance Solutions Ledgermatic, told Finance Magnates: "Today, this document will give all CFOs and audit committees an understanding of how publicly traded companies can leverage this versatile asset."
“We see a future in which businesses will interact with existing fiat infrastructure and ledger-based financial products to improve the financial health of the business,” he added. “It reinforces what we have known for years but have not yet become widespread. You see that digital assets can play a positive and important role in the financial health of your business. "
Tesla's Bitcoin investment is also a matter of reputation
“As large enterprises reduce their dependence on expensive, slow and complex global banking infrastructure, this is a timely reminder that they have secure access to network infrastructure, cheap and fast,” Sally said.
Even before Tesla was announced, Elon's involvement in cryptocurrency was a sign that Musk was willing to bet on his reputation because he was very interested in cryptocurrency.
Shidan Guran, CEO of Merchant Bank Advisor Gulf Pearl, told Finance Magnates: "The difference between Elon Musk and most cryptocurrency experts is that Elon Musk has the most to lose in terms of reputation and trust."
“He doesn't act like a shadow or a pseudonym, and he doesn't rely on cryptocurrency choices, given that he is the head of the most prolific corporation in the world with a market cap of over $ 80 billion," Guran said.
"It goes without saying that hundreds of millions of people around the world regard him as an investment prophet and he will not bet [his reputation] for anything frivolous."
What does this mean for Tesla?
Aside from Bitcoin itself, Tesla's cryptocurrency conversion could have a huge impact on a company. How will it look like?
Luke Sully told Finance Magnates the investment "will not impact Tesla's operational liquidity." In short, investing in bitcoin is "carefully separated from everything related to day-to-day transactions and cash needs."
“If he passed the audit committee, he would undergo severe stress tests on issues such as materiality and cash ratios to keep the company from being exposed,” Sulli said.
And Tesla has already reported that bitcoin is not an investment in the company. "This is a dual use case for Tesla" Sally said. The company said it will accept bitcoin as payment for its products in the future.
“We are initially limited by applicable law as a Bitcoin payment method for our products in the near future” Tesla said.
Both of these use cases are "tracked and described separately" Sally continues. "It's very similar to Square's strategy." Square is known for acquiring $ 50 million worth of bitcoins in March 2020, which also allows users to buy bitcoins directly through the app. Tesla also said it could create its own channel for customers to buy cars with Bitcoin.
And if all goes well for Square, Tesla's investment could be one of the smartest moves the company has ever taken. When Square invested in bitcoin in October, the value of each BTC was approximately $ 46,420. Today one BTC costs approximately $ 215. Thus, Square's investment currently stands at around $ 33 billion. That's an increase of about 10% over the next two months.
If Tesla's investment in BTC follows a similar trajectory, the $ 150 million investment announced yesterday could be worth nearly $ 100 million in five months.
Next three months
Of course, this will require a huge capital inflow into Bitcoin, and in order to take place on this scale, the price of Bitcoin would have to rise to around $ 130,000. The total capitalization of the bitcoin market is set to rise to over $ 2.41 billion.
It's difficult, but something strange has happened. And if other big companies start to follow in Tesla's footsteps, it may not be as far off as $ 130K BTC looks like. Many analysts in the crypto space see this as the same problem as Tesla. This is the time until the business invests in cryptocurrency.
“To be honest, I'm not surprised Tesla bought Bitcoin, and I wouldn't be surprised when Apple and Microsoft do. Having $ BTC at this point is just common sense". Pixelmatic CEO Samson Moe tweeted.
Honestly, Tesla is Bitcoin and I wouldn't be surprised when Apple and Microsoft do it. With $ BTC, it makes sense at this stage.
-Samson Mow
However, there are still technical hurdles that large institutions must overcome in order to comfortably invest large amounts of assets in bitcoin. Caitlin Long, CEO of AvantiBT, tweeted, "Tesla has confirmed that it uses vague intangible accounting, which is an ugly approach (cost savings or market risk + risk of damage)."
"Bitcoin should try to fix Bitcoin [accounting]. This is why Square only invested 2% of its money in BTC" she wrote.
- Why only 7.7% cash? Well, Tesla has confirmed that you are using non-restrictive intangible accounting. This is an ugly treatment (price or low + risk of market damage). Our bitcoiners should try to fix bitcoin acctg. This is why Square only invested 2% of their money in BTC. pic.twitter.com/dqO59cquQ4.
God bless