The price of bitcoin reached $50,000 for the first time, extending the surge sparked by Tesla’s acquisition of the cryptocurrency. The price of bitcoin is also benefiting from new funding from MasterCard and Bank of New York Mellon, in addition to Tesla. According to Coin Statistics, the bitcoin price soared more than 3% to a new peak of $50,487 at about 7:30 a.m. Eastern until reversing. Last week, Tesla revealed that it had acquired $1.5 billion in bitcoin for its balance sheet and that it would begin taking cryptocurrency payments for its cars.
MasterCard has announced that bitcoin and other virtual money will be accepted on its network. A bitcoin-related declaration was also made by Bank of New York Mellon, and PayPal is widening its cryptocurrency offerings, building on the beginning it made late last year. According to CNBC, the assumption that Tesla used corporate funds to buy bitcoin sparked debate about whether other large corporations would follow Tesla’s lead. Uber CEO Dara Khosrowshahi told CNBC last week that the company had discussed purchasing any cryptocurrencies but “quickly discarded” the notion. He also said that they are debating whether or not to consider cryptocurrency as a form of payment.
Cryptocurrency push:
According to Tesla’s fourth quarter and complete year financial statements, the company has over $19 billion in currency and cash equivalents, rendering the $1.5 billion bitcoin acquisition a significant expenditure. Bitcoin soared to fresh highs after the company’s release, reaching a price of $45k at the time of publishing. The company’s stock, on the other hand, was up more than 2% after the announcement.
Elon Musk, the CEO of Tesla, has long been a believer in the potential of cryptocurrency and has previously expressed his views on bitcoin on Twitter. But, more recently, he added #bitcoin to his Twitter profile, causing bitcoin’s price to rise by as much as 20%. Musk has also contributed to the rise in the price of Bitcoin, a cryptocurrency developed by IBM software developer Billy Markus and Adobe computer programmer Jackson Palmer. Musk also said in a Twitter post that “Dogecoin is the people’s crypto.”
Increased legitimacy:
Bitcoin, which is just 12 years old, has experienced a meteoric increase since March 2020, when it was valued at $5,000. (roughly Rs. 3.6 lakhs). Tesla’s move is “possibly one of the greatest changes for the crypto market,” according to Fawad Razaqzada, an expert at ThinkMarkets. “Tesla would be a big player in the car industry, and if it begins to adopt Bitcoin up as a means of payment, it would also legitimize the virtual currency.”
Tesla’s launch, according to Neil Wilson, chief market strategist at Markets.com, could push Bitcoin beyond $50,000 (roughly Rs. 36.4 lakhs) due to Musk’s impact “in influencing pricing activity and driving markets.” However, regarding the timing of Tesla’s Bitcoin transactions with his online tweets, Musk’s stance on bitcoin raises “a real doubt about possible market manipulation.”
Is this stock market different from last years?
Many have found parallels between the latest bull market and the one that began in 2017, but there is one major distinction, according to most analysts. Bitcoin soared to over $20,000 in late 2017 before plummeting by more than 80% in 2018. Retail speculation drove the 2017 rally, according to cryptocurrency enthusiasts, although institutional appetite is driving the new cycle.
Bitcoin, according to MicroStrategy CEO Michael Saylor, “maybe a more stable asset class presently than it had been three years ago.” He clarified that “international markets with a lot of debt” were once run by leveraged retail traders. Last year, MicroStrategy and Square became one of the first large corporations to use corporate cash to purchase bitcoin.
Conclusion:
Tesla announced the acquisition on Twitter, and his tweets have boosted the value of the cryptocurrency. The automaker’s investment was most likely influenced by Musk’s enthusiasm for bitcoin.
