Those who checked Bitcoin’s (BTC) price over 8th-9th February (~+20%) might have experienced a confluent state of excitement and confusion. The collective intensity of the sound waves emanating from the shouts of joy of Bitcoin ‘HODLers’ all over the world may well have triggered seismic movements.
The BTC market was relatively stagnant over the preceding week, while the meme-coin DOGE took the spotlight headlines. Then, suddenly, as soon as technology leader Elon Musk’s impulsive finger tapped ‘post’ on Twitter, the price of BTC exploded and reached All Time High (ATH) at over $48,000.
While Musk had been hyping various cryptocurrencies and retail-investor driven Gamestop’s (GME) surge in the stock market, Tesla’s leader put his money where his mouth is, as the company bought $1.5 billion in BTC.
The news made headlines across major news media, which focused on the scale of the purchase, yet omitted the implications. The company had more than $19 billion in cash and cash equivalents on hand at the end of 2020, according to its most recent filing.
It would be easy to mistake this purchase as an investment, but Tesla did not buy Bitcoin speculatively: they bought it recognising the utility of digital currency assets for payments. The ‘Bitcoin bag’ was purchased to create liquidity for their plan to accept Bitcoin for Tesla vehicle purchases. Tesla said it will start accepting payments in Bitcoin in exchange for its products “subject to applicable laws and initially on a limited basis.”
It’s 2021 and you can now buy the most ‘hyped’ cars in the world with Bitcoin. This is a reality which seemed improbable to most outsiders until recently and paves the way for broader digital currency acceptance for big-ticket items such as real estate and marine vessels.
We at WadzPay believe that stable coins will ultimately lead to broader digital currency acceptance, yet Tesla’s stamp of approval on cryptocurrency such as Bitcoin gives a broader assurance for this digital asset class, beyond stable coins.