Bitcoin surges past $44,000 after Tesla invests about $1.5 billion

Nachiket Mhatre
·2-min read

Bitcoin surges past $44,000 after Tesla invests about $1.5 billion
Bitcoin surges past $44,000 after Tesla invests about $1.5 billion

08 Feb 2021: Bitcoin surges past $44,000 after Tesla invests about $1.5 billion

Elon Musk is out ruffling feathers yet again. Bitcoin hit record levels surpassing $44,000 after Tesla invested a massive $1.5 billion in the cryptocurrency.

Tesla's decision to consolidate its position in the digital currency wasn't entirely surprising because Musk had made a foreshadowing Twitter move of changing his bio to simply read #bitcoin.

Bitcoin briefly surged past $44,000 after the Tesla's investment.

Ditching the dollar: Tesla diversifying cash reserves to maximize returns

Tesla's foray into Bitcoin was elaborated in a filing, where it indicated that it is a part of the company's broad investment policy. The electric car maker is diversifying its monetary reserves to maximize returns on cash.

The move comes after Musk had already publicly stated the possibility of converting "large transactions" of Tesla's assets into Bitcoin back in December.

Paradigm shift: Electric car maker will also accept Bitcoins as payment

Tesla's embrace of the cryptocurrency isn't restricted as a mere financial investment. The car manufacturer will also begin to accept Bitcoins as payment for its cars and services in the near future.

This would make Tesla the first major car seller doing business using the blockchain-driven digital currency. This legitimizes Bitcoin as a viable currency, while also increasing its value in the short term.

Fiat currency: The mad influx of dollars is fueling Bitcoin growth

The recent Bitcoin rally might be linked to two disparate, but potentially interlinked events.

The Federal Reserve (which isn't a US Government body despite its name) printed a fifth of all US dollars that ever existed last year. That's 3.44 trillion in US dollars pumped into the economy.

While US citizens got stimulus checks, the world's billionaires became richer to a cool $10.5 trillion.

Smart money: The rich dumping the dollar for tangible investments, and Bitcoin

Printing money by the truckloads tends to cause inflation in the long term, which reduces the dollar's actual purchasing power.

Under such circumstances, the smart money is usually diverted from the freshly abundant cash and into investments that hold their value better. And sure enough, property rates have kept climbing despite the pandemic.

The recent Bitcoin rally is also attributed to the same phenomenon.