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Bitcoin surge is Tesla-fueled according to some analysts as the price of the digital coin started to rise just minutes after Tesla broke the news.
Bitcoin saw an unprecedented rise in the latest Tesla-fueled surge, driving its price through $45K and $46K to touch $47,513.57, a new all-time high within an hour before settling back to $47,053.09. The digital coin is now up over 20% in the last 24 hours thanks to the announcement from Tesla that it has bought $1.5 billion worth of Bitcoin.
Tesla Inc (NASDAQ: TSLA) announced on February 8 that the company has invested $1.5 billion in Bitcoin and plans to accept payments for its cars in Bitcoin which is “subject to applicable laws and initially on a limited basis,” according to its filing with the Securities and Exchange Commission (SEC).
The automobile company added that they bought Bitcoin after they made a change in investment policy last month that allowed “more flexibility to further diversify and maximize returns” on cash not required for operations.
“As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds, and other assets as specified in the future. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future,” Tesla stated.
Reaction from the Market
Bitcoin surge is Tesla-fueled according to some analysts as the price of the digital coin started to rise just minutes after Tesla broke the news. Bitcoin’s latest milestone comes after the coin struggled to breach the $35,000 barrier for 4 weeks.
However, some analysts have also attributed the recent surge to a number of reasons including Asia investors riding on the news of Tesla purchasing Bitcoin, a lack of resistance levels above $45,000 as the coin was expected to consolidate for days before breaking above the $40,000 and Tether’s latest money pump into the market. Bitcoin’s latest surge also happened hours after Tether (USDT) print started again fueling the idea that Tether pumping money into the market might be behind this surge.
Tesla Inc and its CEO Elon Musk have also been the subject of criticisms from the market after the announcement. One analyst stated that tweeting excitedly about bitcoin is one thing while spending $1.5 billion of shareholders’ funds on the digital coin is another.
Other analysts are also questioning Tesla’s decision to use shareholders’ funds to make that purchase even though the California-based company had $19.38 billion in cash and cash equivalents on its books at the end of 2020. “If Musk, the CEO and 20% owner is so passionate and can’t resist the urge to speculate, why isn’t he using his own money?”, one analyst stated.
Others also believe that the purchase may be good for Elon Musk as the surge is already being tagged as Tesla-fueled, but definitely risky for the company as the news could damage its climate bonafide and its reputation with customers.