2021 has been a fantastic year for crypto, even though only one month of it passed. However, in recent days, the crypto community has been waiting for a new piece of amazing news. Now, the same news arrived and did that with a bang. It includes the information that Tesla Motors Inc, one of the biggest companies in the tech domain, decided to invest in bitcoin. That news turned into a true rocket that launched the price of bitcoin over the 44,000 USD mark and ETH token to 1,770 USD.
But, that was not the end of it by no means. Instead, the climb continued the next day, taking the BTC token over 47,000 USD and setting a new ETH record as well. That means that new records also might be just around the corner. The investors and traders cannot be more excited. The coming week or two might easily see BTC token reach over 50,000 USD and ETH do the same for the 2,000 USD barrier. With so much excitement in the air, it is hard to find the right long-term focus. However, even with a lot of skepticism, it is nearly impossible to deny that presently, the cryptocurrency ecosystem got the lottery with the Tesla investment.
Tesla Finally Invests
Discussions and rumors about Tesla’s investment in the crypto community have been going on for some time. Unsurprisingly, the chief creator of those discussions and rumors was none other than Elon Musk. He was never a stranger to the crypto community ecosystem especially when it comes to social media and his outlet of choice, Twitter. So, there has been a lot of speculation about the moment when this company would decide to invest some of its profits and liquid assets into one or more cryptocurrencies. Now, the same has finally occurred. The electric vehicle maker revealed on Monday in its annual report with the SEC that it invested around 1.5 billion USD into bitcoin.
Also, the company said that it is operating under a new investment policy. It will see the company acquire digital assets and hold them either occasionally or long-term. All of this is a part of a diversification plan that the company has, which includes, besides investing in crypto, also placing money into gold stocks, gold bullion, and other vehicles of investment. That is unsurprising, having in mind the potential for a spike in infection, along with the speed with which Elon Musk accepts trends that are otherwise primarily seen in social media, esports, and many other digital-first domains.
The story of Elon Musk and cryptocurrencies goes a long way back. Even in 2018, this tech billionaire referenced and discussed digital tokens including bitcoin and dogecoin. In recent weeks, that discussion took on a feverish dimension when Musk decided to get into the dogecoin phenomenon. Because of this, many in the same joke coin community hope that some of his investment would go into this cryptocurrency network as well.
However, in the end, the company decided to invest solely in bitcoin. Thanks to that, the prices are going sky high and the media interest keeps on ramping up. Naturally, that is also generating a whole new level of volatility. Because of this trend, the current prices of all major cryptocurrencies can just as easily slide down as they can push further up. Also, a lot of the present hype is happening without any backing in the technological sense. that could turn into a major issue down the road or even potential is sooner than expected.
The changes in the value of these cryptocurrencies are occurring without absolutely any change in the nature of the bitcoin network. Instead of that, everything that was on offer with this cryptocurrency one year ago is on offer in exactly the same shape and form today. Ethereum network, on the other hand, is continually evolving and changing its baseline functionality. In theory, it should be the one spearheading the current rise in price value and market capitalization.
However, it seems like the bitcoin network was the one that managed to capture the attention of the institutional investors. Now, they are the entities that are primarily pumping in money and expanding the value of all tokens. MicroStrategy’s approach to that is the perfect example. That is focused on the digital tokens from the bitcoin network, but like always in the crypto market domain, it is spilling over onto other digital networks as well. Yet, like often, the problem is that the underlined value and intrinsic assessment of the potential of these cryptocurrencies are completely out of whack with their tech backing. But, it looks like that for now the massive institutional investors simply do not care about this problem. Instead, it looks like the ROI, the assessment and calculation, is the one behind the wheel.
Bad Global News
For a short while, the pump of funds that was started when Tesla reviewed its investment decision turned the business world on its head. In a limited time period, the bitcoin network was more valuable than Facebook or even Tesla Motors itself. This if nothing else is a testament to the incredibly volatile present economic situation that the entire world finds itself. The dangers of that kind of environment are most likely clear to everyone but companies still need to do what they can and how they can alleviate potential catastrophic pressure they might come under.
Of course, that primarily includes the possibility of strong waves or even multiple waves of inflation which will be brought on by central banks pumping in money into their economies. Shielding oneself from that in the corporate sense now more and more includes the need to diversified portfolios up to a point that would be unimaginable just a few years ago. Today, the price of a single BTC token going through the roof practically overnight because of a single company’s decision to buy these digital assets, is clearly more than imaginable for a growing number of institutions.