Tesla and Mastercard – Breakthrough for Bitcoin?
Bitcoin, the most popular cryptocurrency, has risen sharply to an all-time high of $48,000 after Elon Musk, the world’s richest man, announced a $1.5 billion investment. Tesla and Elon Musk, made a statement on Monday during the SEC filling that it has invested $1.5 billion in bitcoin and will begin accepting it as a payment method. Besides, the company’s founder, Elon Musk, issued a Bitcoin statement on his Twitter bio, indicating his support for the digital currency. It was reported that on Tuesday, the fifth of February, he added #bitcoin on his Twitter bio. Following that action by the world’s richest man, the largest cryptocurrency by market cap and the first crypto coin price has risen by about 20%.
“I think bitcoin is good now, and I’m a bitcoin bidder, Musk said in a live interview on Sunday at Clubhouse, a popular audio chat app. Many of my friends have long tried to persuade me to see the need to stick with bitcoin.”
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Bitcoin is breaking another record
Bitcoin hit an all-time high of around $45,000 on Monday after electric car manufacturer Elon Musk Tesla invested $1.5 billion in digital currency. Bitcoin reached $44,795.20 at 1325 GMT and has since cooled slightly to $44,207.95. Since the beginning of this year, cryptocurrency exchange rates have increased by about 50%. „This is probably one of the biggest events in the cryptocurrency industry,“ said ThinkMarkets analyst Fawad Razakzada.
Tesla’s move came after CEO Musk changed his Twitter movie to simply „#bitcoin“ last week.
Many central banks have responded to the rise in cryptocurrency usage and the decline in global currency use by releasing plans for bank-backed digital assets.
Bitcoin, not regulated by the central bank, has become an attractive option for investors hungry for exotic things, but criminals have also noticed its subtle charm.
Disputes over the status of digital assets launched at the end of 2008 continue regardless of whether they should be considered the form of currency, assets, or commodities.
After the unit price, which cost a few cents at the end of 2008, first exceeded $1,000 at the end of 2008, it became increasingly attractive to financial institutions and experienced rapid price fluctuations.
Just launched 12 years ago, Bitcoin experienced a sharp rise of $5,000 in March due to PayPal, an online payroll announcement that it will allow account holders to use cryptocurrency.
On Wednesday this week, Bitcoin, the world’s most valuable cryptocurrency, hit a new high of $48,000 for the second time, when major tech and financial companies start to show interest in cryptocurrencies. Decentralized cryptocurrency revenue on Thursday was over 60% YTD, according to the CoinDesk, a popular News website for blockchain and cryptocurrencies.
Bitcoin’s solid rise occurs when Tesla and Mastercard showed rising interests in digital currencies
Tesla will be a major player in the automotive industry and its support for cryptocurrency will give digital currencies additional legitimacy once they start accepting bitcoin as a means of payment. Also, Tesla’s announcement in a filing made to the US Securities and Exchange Commission is another element of confidence that crypto coins are soon going mainstream. However, regulators share concerns that the currency can be used for illegal transactions.
Razakzada added that as more companies start to accept bitcoin, there will be more demand in the limited supply market. So, while the long-term outlook for Bitcoin is still optimistic, it’s starting to look pretty expensive in terms of fiat money.
Stephen Mathi-Davis, co-founder and CEO of Q.ai’s Investment Strategy, told Fox Business, „This demonstrates the further normalization of cryptocurrency as a real asset class. High Valued Individuals and Family Office access to digital assets increasing investment interest suggests that investment allocation is becoming more legal.
„The recent launch of Bitcoin (BTC) will accelerate the normalization process of cryptocurrency,“ he added. “Because a lot of potential portfolios/alpha income was left on the table.”
The broader Bloomberg Galaxy Crypto Index also recently set a record.
Michael Stark, the market analyst at online digital trading website Exness, said in a statement with FOX Business that Tesla’s decision to buy cryptocurrency may seem like a bubble investing in a bubble, but in reality, there are so many assets that could be called bubbles.
Interest in cryptocurrencies has risen again, as Musk, the world’s richest man, has become a focal point for crypto advocates and supports the claim that Wall Street and mainstream are embracing more digital assets. However, critics argue that speculators are behind Bitcoin’s rise and the bubble will burst again.
Before Tesla’s announcement of the Bitcoin initiative, Musk said it has been in support of bitcoin as a joke in social audio apps and made many funny Twitter posts about Dogecoin, a Sibai Nu-themed cryptocurrency, that caused prices to soar despite starting as a joke.
But the bitcoin $1.5 billion investment by Tesla isn’t as big as you might think. Right now it’s only about 0.2% of the cryptocurrency market value.” No matter what the mascot corporate leaders do or not do regarding crypto support, bitcoin will keep moving higher towards acceptance sooner or later.
Tesla’s $1.5 billion investment is focused on whether more companies will buy bitcoin, but the stake is a drop in the sea compared to the assets of the top US companies.
According to Bloomberg, the purchase amount is only 0.05% of the cash and about $27.9 billion in cash for S&P 500 members.
Mastercard announced on Wednesday that it would start supporting some cryptocurrencies this year. In a statement, the company announced, “we are currently preparing for the future of cryptocurrencies and payments, and MasterCard will start supporting some cryptocurrencies directly on our network this year. This is a big change that requires a lot of work.”
We will be very sensitive to the assets we support based on the principles of digital currency, with a focus on consumer protection and compliance. Mastercard Inc. is one of the newest conglomerates starting to take advantage of digital assets this week and announced plans to allow cardholders to handle certain cryptocurrencies.
The company is also „actively“ engaging with central banks around the globe regarding their plans to launch a new digital currency, Mastercard mentioned in a blog post-Wednesday. Mastercard’s plan to integrate cryptocurrency payments is another indicator of the significant structural changes taking place in our financial infrastructure, said John Wu, president of Ava Labs.
Existing payment platforms use digital currency solutions more suitable for borderless economies through internet access. Nathan Cox, investment manager at Two Prime, an investment firm specializing in digital asset management and derivative strategies, is just the beginning of corporate adoption as digital currencies begin to play an increasingly important role in managing strong balance sheets.
Twitter Inc. has also done some “upfront thinking” around how to handle Bitcoin, including if employees and vendors ask to be paid in the cryptocurrency and whether the firm needs to have the digital asset on its balance sheet, CFO Ned Segal said in an interview on CNBC. Twitter co-founder Jack Dorsey has been a long-time advocate of Bitcoin. Square Inc., which Dorsey also co-founded, has invested in the cryptocurrency.
Bank of New York Mellon Corp. announced on Thursday that it will store, transfer and issue bitcoins and other cryptocurrencies to institutional clients.
Ed Moya, Senior Market Analyst at Oanda Corp, said, „The announcement of Mastercard and BNY Mellon confirms the fundamental changes that financial institutions are making for cryptocurrencies.“ This is good news for further adoption of cryptocurrency and it will probably continue.
Twitter Inc. CFO Ned Segal said in an interview that they are also thinking ahead of time about how bitcoin is processed, including whether employees and sellers have to pay in cryptocurrency and whether the company needs digital assets. Twitter founder Jack Dorsey has long been a bitcoin fan. Square Inc., founded by Dorsey, has also invested in cryptocurrency.
Amid the retail investor’s craze, the popular Reddit forum Wall Street Bet is also talking about cryptocurrency. An unverified Twitter account sent a call to „mod Wallstreetbets“ to buy bitcoin and marijuana stock.
Regulatory controls are still a wildcard for cryptocurrency investors. Finance Minister Janet Yellen spoke on innovation in the financial sector at the Treasury Forum and warned that cryptocurrency abuse is becoming a growing problem. Yellen has previously expressed concern about the use of cryptocurrency for illegal financing.
BNY Mellon, the oldest bank in the United States, announced on Thursday that it will be the first global bank to launch digital asset services in late 2021.
BNY Mellon is proud to be the first global bank to announce plans to offer integrated digital asset services, said Roman Regelman, head of digital technology and asset services CEO at BNY Mellon on Thursday.
“The increasing customer demand for digital assets, the maturity of innovative solutions, and increased legal clarity provide great opportunities to expand our current service offerings in this growing area. While awaiting further evaluation and approval, these innovative innovations,” he continued. It is expected to provide an opportunity and shape the industry later this year.”