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News & Analysis

Elon gives Bitcoin a boost

9 February 2021

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By Klavs Valters
 @klavsvalters

It is no secret that Elon Musk has been very outspoken about Bitcoin in recent times. Last week, the Tesla CEO changed his Twitter bio to #bitcoin, which has since been removed. Today, it was announced that Tesla has bought $1.5 billion worth of world’s largest cryptocurrency, according to a Securities and Exchange Commission (SEC) filing.

The recent announcement boosted the price of Bitcoin, sending it above $44,000 level for the first time. Tesla also announced that it would start accepting Bitcoin as a payment method for its products in the future.

”In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, we may invest a portion of such cash in certain specified alternative reserve assets. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy. 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, which we may or may not liquidate upon receipt. Digital assets are considered indefinite-lived intangible assets under applicable accounting rules. Accordingly, any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale. As we currently intend to hold these assets long-term, these charges may negatively impact our profitability in the periods in which such impairments occur even if the overall market values of these assets increase”, Tesla reported in the SEC filing.

BTCUSD – Daily

Top 5 digital currencies market cap*

  1. Bitcoin (BTC) at $803,294,092,089
  2. Ethereum (ETH) at $195,768,818,377
  3. Tether (USDT) at $28,803,725,300
  4. Cardano (ADA) at $22,123,206,722
  5. Polkadot (DOT) at $20,617,575,322

*Market cap as of 8/2/2020

Source: CoinMarketCap

Bitcoin is not the only digital currency that Elon Musk has been outspoken about on social media recently. He has also inspired a rally in a ”meme” cryptocurrency – Dogecoin. The price of Dogecoin has surged by over 99% in the last 7 days making it world’s 10th largest cryptocurrency by market cap. Worth pointing out that Dogecoin only started as a joke.

 @klavsvalters

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