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Tesla just invested in a lot of Bitcoin. Why did Elon Musk think this is a good idea? Here's why this happened.

Does Elon Musk think Bitcoin can help Tesla go to the moon?

Jeff Bezos wasn’t the only one full of surprises – Elon Musk just bought $1.5 billion of Bitcoin. The Tesla CEO isn’t playing any games when it comes to the future of the human race, including the future of its currency.

In Tesla’s 2020 earnings release, the company stated: “Despite unforeseen global challenges, we outpaced many trends seen elsewhere in the industry as we significantly increased volumes, profitability and cash generation.”

With Tesla’s stock rising over the last few years, why not invest in another strong company like Bitcoin? According to Investor’s Business Daily, with Tesla’s new Model S & X motors ready to hit production, Tesla’s stock price is estimated to grow by at least fifty percent.

Bitcoin vs Tesla 

Elon Musk invested in the cryptocurrency Bitcoin in January and his investment caused many investors to do the same. According to BBC News, with Musk’s single investment, he caused the price of Bitcoin to rapidly increase by 17%. This meant the worth of one Bitcoin jumped up to be approximately $44,220. 

Tesla on the other hand tried to increase the motor company’s returns. Elon Musk’s company also stated they’ve “updated their investment policy” in January which means they would like to invest in “reserve assets” like Bitcoin which would create future assets.

As BBC News reported, using Tesla’s money to purchase $1.5 billion worth of Bitcoin spiked the cryptocurrency market from between $5,000-$10,000 in January 2020 to more than triple in just over a year. 

A benefit of Elon Musk investing in Bitcoin is that Tesla has agreed to sell their products with Bitcoin payments. CNBC noted, Tesla’s products will be “subject to applicable laws and initially on a limited basis” for all consumers. This means that Tesla will be the first motor company to sell vehicles with cryptocurrency. Dang! 👀

Tesla’s wild investment

Per BBC News, Vice-President of Market Intelligence at Messari Eric Turner stated: “I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move.”

Turner further explained: “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.”

However, the chief market analyst for Markets.com Niel Wilson is skeptical and warned investors that Bitcoin can be a “very volatile” investment. Wilson expressed: “Tesla is now starting to take on big (investment) risk. This may not worry a lot of investors, but some conservative types might be concerned.”

Elon Musk

Though Elon Musk praised Bitcoin back in 2019 for being his “fav cryptocurrency”, the world’s richest man hasn’t stopped looking at the company for a long-term investment. 

Many Tesla fans were surprised by the Tesla CEO’s investment. According to CNBC, Elon Musk even credited Bitcoin on his Twitter account but eventually removed the #bitcoin from his Twitter. 

Bitcoin definitely received a bit of advertising from Elon Musk. Musk told Clubhouse: “I’ve got to watch what I say here because some of these things can really move the market. . . Many friends of the mine have tried to convince me to get involved in bitcoin for a long time.”

Tesla’s Elon Musk continued: “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin. I think bitcoin is really on the verge of getting broad acceptance by conventional finance people.”

Elon Musk was previously sued by SEC for fraud in 2018 when he tweeted about owning the company’s private shares. Today Musk is turning over a new leaf and thinks Bitcoin has “intrinsic value” according to BBC News

Do you think Tesla’s large investment will get us to the moon? Let us know in the comments below.

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