Business and EconomyGlobal Markets

Bitcoin’s price jumps 14% as Tesla buys $1.5bn of the cryptocurrency – Agwu, C. J

Elon Musk’s car firm Tesla bought $1.5bn (£1.1bn) of Bitcoin in January and expects to start accepting it as payment in the future.

The news caused the price of Bitcoin to jump by 14% to $43,968. Tesla said it wanted to maximise its returns on reserve cash, not being used in day-to-day running of the company.

In 2017 INC listed about four ways that startups can fund their ventures through bitcoin. Bitcoin opened up a new world for companies to fund and get funded, it said. These options include Dropdeck, Dispatch, Ambisafe and Smith + Crown

This comes days after Mr Musk drove up the price of Bitcoin by adding “#bitcoin” to his Twitter profile page. He removed it days later but has continued talking up Bitcoin and other cryptocurrencies, including dogecoin, which jumped 50% after his endorsement. 

This is coming against the backgdrop of ban on crytocurrencies including Bitcoin by the Central Bank of Nigeria. Adducing reasons for the ban, the CBN made reference to the position on crytocurrencies taken by Warren Buffett but failed to reference potitive positions taken by other wealth individuals like Elon Musk

In a stock market filing, Tesla said it had “updated its investment policy” and had been looking to invest in “reserve assets” such as digital currencies, gold bullion or gold exchange-traded funds.

It said it had then bought $1.5bn of Bitcoin and could “acquire and hold digital assets from time to time or long-term”.

“Moreover, 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,” it said.

Mr Musk said a week ago in a tweet that Bitcoin was “on the verge” of being more widely accepted among investors.

Analysts said the move by Tesla was liable to prove a game changer for the currency.

“I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move,” said Eric Turner, vice president of market intelligence at cryptocurrency research and data firm Messari.

“One of the largest companies in the world now owns Bitcoin and by extension, every investor that owns Tesla (or even just an S&P 500 fund) has exposure to it as well.”

On December 23, 2020, Forbes published an article “Bitcoin Rally Attracts Wave Of Private Investment As Leading Blockchain VC Raises New $120 Million Fund” and said that “On December 23rd, Seoul-based blockchain investment group Hashed revealed that it has raised $120 million for its first crypto fund. The firm, led by CEO Simon Kim, intends to invest in disruptive blockchain startups including base layer protocols similar to Ethereum. According to Kim, the next wave of crypto networks will mark the start of the “protocol economy,” an era in which data and value is transmitted globally by crypto networks using a shared public ledger. He predicts strong government and institutional support for this new paradigm and has had no trouble selling out the group’s first VC fund”.

Though there has been some controversies and misgivings in some quarters by some persons regarding bitcoin and cryptocurrencies generally, the rise of the currencies continues and seems from all indications to be gaining ground and fostering a new economy.

This latest move by Elon Musk, a globally respected investor and business tycoon and currently, as at January 2021, the richest person in the world with his wealth at a staggering $188 billion, is a thumbs up for bitcoin and cryptocurrencies.

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