Tesla — the American car manufacturer invests 1.5 billion dollars in bitcoins. Because of this, bitcoin — which is the most popular cryptocurrency — almost gained 1,150 percent from March 2020 lows. It traded for a few hundred dollars only five years back because investors search for alternative wealth sources and retail traders ride the wave. But right now, it was fast approaching the $50,000 mark. After Elon Musk-led Tesla's invested in the cryptocurrency, it may become a mainstream asset class for corporations and money managers.
One of the senior strategists at State Street Global Markets, Marija Vertimane stated, "Bitcoin is capturing investors' attention — I get more and more questions about it."
But why did Tesla decided to invests?
Well, the decision of Tesla is contained in his communication to the Sec, the American authority of market surveillance financial. It explains that bitcoin can be flexible when it comes to diversify and maximize further profits.
He also plans to accept cryptocurrency payments. He would eventually accept it as payments for its cars. Analysts estimate that this is a larger shift as companies and big investment houses follow small traders into the asset.
Other people have a different point of view. Marija Vertimane added, "From a practical point of view, using bitcoin to buy anything — Tesla cars — would be still extremely difficult given its excessive volatility."
It's true, bitcoin's volatility has been a hindrance to those serious investors when it comes to transactions. Analysts also raised a question regarding how bitcoin's volatility would affect someone buying a Tesla car.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank said, "Unless the price of bitcoin stabilizes, either bitcoin's price falls drastically and you end up having won a Tesla in a lottery, or its price triples and you end up paying your Tesla far too expensive."
As of now, the price of one bitcoin climbed to a peak of $48,216 — almost enough to buy the best-selling Tesla vehicle (Tesla Model Y SUV).
Compared to ethereum which struck a record high of $1,784.85 today.
Elon Musk is just a business of my kind that I am aiming to be like in the nearest future. Just imagine him always investing in every business he sees. Now again on his way to get twitter.