From making Bitcoin an official payment method for Tesla to backing down just two days later, agitating millions who bet on Elon’s word.
Highlights
- Elon Musk disappointed crypto-enthusiasts, traders and investors with the announcement of withdrawing the commitment to sell “a Tesla for a Bitcoin”.
- Bitcoin staggered by 13 percent within 24 hours, dropping from around $57,000 per coin to around $49,600.
- Zach Kirkhorn, CFO of Tesla, explains their earlier decision of investment in Bitcoin as an opportunity to store cash that wasn’t ready to be used and could provide a return on while ensuring liquidity.
Two days ago, Elon Musk’s Tesla was the latest global brand that joined the network and started accepting Bitcoin as an official payment method. Their move began in February 2021, when Tesla announced they have invested $1.5 billion in this cryptocurrency. With this announcement, they spiraled a positive change in the world of digital currency.
The move paid off well as it was reported that the company made around $1 billion in profits just a week after they invested in Bitcoin. However, knowing Musk’s temperament, he made a tweet stating Tesla will no longer be accepting Bitcoin as he worries about the impact on climate footprint.
Game of Gain and Loss
Long before Tesla’s announcement Bitcoin was seen more as a dodge currency that could be unreliable and untraceable. However, the scenario in the cryptocurrency world changed after the company released their statement after which Bitcoin’s valued spiked to $50,000 as opposed to $47,000 earlier.
For the first time in history, the currency touched this value and this increment led several people and institutions to join the Bitcoin network drastically. Giving chance of growth to trading sites to make money, these sites use advanced AI systems, to analyze the market and use the data to create accurate predictions on its future price. But who in the world could have predicted this master move by Musk of withdrawing his statement.
Watch: $365 bn wiped off the Cryptocurrency market since Tesla rejects Bitcoin payments
Traders and investors critically expressed disappointments over Twitter as they lost millions. There is serious money involved here and it is even more difficult to chase as Bitcoin is made untraceable. The price of the coin skyrocketed after Musk’s tweet. But with his withdrawal statement the price dropped by more than 10 percent, converting into market-wide losses.
The Short Wave of Investor Happiness
With the earlier announcement of the company, it opened gates for many businessmen who were looking to store or invest their unreported cash. All transactions made with Bitcoin are instant. People have far greater security because Bitcoin provides them with a certain level of online anonymity. Also, banks are excluded from each transaction.
Although with the latest development where Tesla withdrew their decision of making Bitcoin an official payment arm, they cited reasons saying they are immensely concerned about the increasing use of fossil fuels for Bitcoin mining and transactions. Among these especially coal, which has the worst effect on environment through its fuel emissions.
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Since Musk has always been in news for trendsetting with its marketing approach or with its products, this mode of payments and fiat money could have been one idea to sell their cars through unaffiliated dealerships.
Earlier concerns of disturbing the US Dollar
This investment of $1.5 billion by Tesla could also be a step against the hegemony of the U.S. dollar as the world’s reserve currency since World War Two. Undoubtedly, Bitcoin represents the future of payment but still; it isn’t currently an effective means of exchange due to its current volatility.
