Bitcoin surges over record 10% after Elon Musk’s Tesla invests $1.5 billion

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Investors anticipated other firms will soon join a list of companies that invest in or hold Bitcoin. (Photo: Reuters)

SpaceX CEO Elon Musk’s electric vehicle company ‘Tesla Inc’ has purchased $1.5 billion of the cryptocurrency, and would soon accept it as a form of payment.
This move has led to another large stride by Bitcoin on Monday — its acceptance toward the mainstream. Bitcoin surged more than 10 per cent to a record high of $43,625 after Tesla’s disclosure.
The announcements made in Tesla’s 2020 annual report, drove a 10 per cent surge in the world’s most widely-held cryptocurrency. Investors anticipated other companies will soon join a list of companies that invest in or hold Bitcoin including the world’s largest asset manager BlackRock Inc, and payments companies Square and PayPal.

Tesla’s shares surged nearly 500% in 2020
Musk has upended Wall Street over 2020, and briefly became the world’s richest person as shares of Tesla surged nearly 500 per cent to become the 5th most-valuable US company, leaving other firms and investors eager to follow in his wake.
“If any lesser mortals had made the decision to put part of their balance sheet in Bitcoin, I don’t think it would have been taken seriously. But when the richest man in the world does it, everyone has to take a second look,” said Thomas Hayes, managing member at Great Hill Capital LLC in New York.

Heavy trading in cryptocurrencies
The news has sparked heavy trading in cryptocurrencies and caused exchanges like Coinbase, Gemini, Binance to experience technical issues, according to CoinDesk.
A well-known supporter of cryptocurrencies, Musk has weighed in regularly on the past month’s frenzy in retail investment, also driving up prices of the meme-based digital currency dogecoin and shares of US video game chain GameStop. He said a week ago that bitcoin was “on the verge” of being more widely accepted among investors, and in December asked if it was possible to do large transactions in the currency.

Musk adds #Bitcoin in Twitter account bio
In late January, Musk changed the bio of his Twitter account, which has 46 million followers, to include #bitcoin. Tesla said in a filing, the decision was part of its broad investment policy as a company and was aimed at diversifying and maximising its returns on cash, including holding gold.
The report said it ended 2020 with $19.38 billion in cash and cash equivalents. “We expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt,” the company said.
Tesla said it had invested an aggregate $1.5 billion in bitcoin under the changed policy and could “acquire and hold digital assets from time to time or long-term”.
Tesla is the latest company to add bitcoin to its corporate treasury, following similar moves by Square, the payments company led by Twitter Inc chief Jack Dorsey and US software company MicroStrategy Inc.

(With inputs from agencies)

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