Bitcoin took it a notch higher in terms of mainstream acceptance Monday after the world’s richest man and his electric car company revealed they had acquired $1.5 billion of the digital currency.
After the purchase and the announcement that Tesla will accept the crypto as a mode of payment in the future, Bitcoin’s price shot up to an all-time high.
The disclosure propelled a roughly 20% rally in the most sought-after virtual currency to more than $47,000.
To put it in perspective, 0.8 Bitcoin would be enough to buy a Tesla Model 3, based on current market prices.
A cause of the technical glitch
News of Elon Musk shelling out that much cash into Bitcoin triggered heavy trading in digital currencies and caused exchanges like Binance, Coinbase, and Gemini to experience a technical glitch, Coindesk reported.
According to Tesla, it was trying to maximize returns on money that the company is not using in its daily operations.
In a stock filing, the Palo Alto, California-based company said it “updated its investment policy” last month and now wanted to invest in “reserve assets” like gold, gold exchange-traded funds, and Bitcoin.
The prices of the precious metal soared more than 1% late Monday while Ethereum, another virtual currency, advanced to a record high.
The possible future of money
Tesla joining the crypto bandwagon brings the discussion of what some financial analysts say is the “future of money” to the big leagues.
The involvement of Tesla — the fourth largest company in the S&P 500 — in the crypto business looks promising with Musk at the helm.
Bitcoin quadrupled in 2020 and is up another 60% so far this year in the face of solid endorsements from big-name investors like Paul Tudor Jones and companies like PayPal Holdings Inc.
Maybe a game-changer
Based on figures compiled by Bloomberg, Tesla’s Bitcoin purchase is equivalent to just 0.05% of the nearly $2.8 trillion of cash and cash-equivalents held on the balance sheets of S&P 500 investors.
“It is the ‘year of institutional investment’ in cryptocurrency,” well-known Bitcoin bull Michael Saylor said during a Tuesday interview with Ran Neuner, former host of CNBC’s “Crypto Trader.”
Some analysts are upbeat about the promise that Bitcoin brings, adding that, for Tesla’s part, its investment in the world’s most popular virtual money could be a game-changer for the cryptocurrency.
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