Daily Market Recap - Tesla Invests $1.5 Billion in Bitcoin, Price Reaches New Record High

In a document addressed to the SEC, the management of the electric vehicles‘ manufacturer Tesla detailed its performance for the year 2020. This form is mandatory in the US and allows investors to see more clearly what will happen inside the company. Usually, the documents are a simple formality and don’t typically give much large unexpected information but this time the shareholders had a nice surprise ...

Teslas SEC filing mentioned that the company purchased the equivalent of one and a half billion US Dollars in Bitcoin during the month of January. But that's not all, since it also states that the company is seriously considering accepting this means of payment to sell its autonomous cars on the Internet.

Since the discovery of this information, the public has been flocking to Bitcoin similar to what had already happened last time following a change in Elon Musks Twitter page. The leader is known to have promoted Dogecoin, a cryptocurrency that is reputed to be a joke. The price of Bitcoin briefly rose above $44,000 before falling back a few minutes later.

As is often the case with sharp increases, the cryptocurrency exchange platforms are suffering. This is the case of Binance or Coinbase, whose services are no longer accessible since Tesla's announcement.

The graph below speaks for itself: the announcement of this information had an immediate effect on the price of Bitcoin. The price of Bitcoin was propelled to a new historical record, above $44,000. The previous record, which dated back to the beginning of January, was shattered by this rise.

If Bitcoin gains 15% on this announcement, the other cryptocurrencies are not to be outdone. Ether is flirting with its historical record at over $1,700 while DeFi tokens (such as AAVE or UNI) are also participating in this increase.

(Chart Source: Tradingview 08.02.2021)

Tesla is not the only publicly-traded company that has chosen to bet on the cryptocurrency. MicroStrategy, a US company, has been accumulating reserves of cryptocurrencies since last August. According to information provided to the SEC, it has purchased $1.145 billion worth of Bitcoin. The firm explains this choice by the desire to “further diversify and maximize returns on our cash that is not needed to maintain adequate operational liquidity”.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.