Tesla announced it invested $1.5 billion in Bitcoin in its annual report filed with the Securities and Exchange Commission, prompting the cryptocurrency to rise to an all-time high on Monday.
While the clean energy company acknowledged in the report that digital assets “may be subject to volatile market prices,” it maintained that the change would allow for “more flexibility to further diversify and maximize returns on [its] cash.”
“We believe our bitcoin holdings are highly liquid,” Tesla wrote, adding that it will begin accepting Bitcoin as a form of payment.
CEO Elon Musk touted Bitcoin and other forms of crypto assets on Twitter, which contributed to the rise in hyped assets such as GameStop stocks and the meme-based digital currency Dogecoin.
Tesla’s dump of $1.5 billion into Bitcoin caused the value of the electronic currency to rise over 10%.
Breaking: Bitcoin surges to new all-time high amid news of Tesla investment https://t.co/wFgMypwnsB pic.twitter.com/13fSWgTF1i
— Bloomberg Markets (@markets) February 8, 2021
Bitcoin was approaching the point of being more widely accepted among investors, and analysts have been vocal that Tesla’s support could further integrate the cryptocurrency into peer-to-peer trading, Musk said earlier in February.
“One of the largest companies in the world now owns Bitcoin, and, by extension, every investor that owns Tesla (or even just an S&P 500 fund) has exposure to it as well,” said Eric Turner, vice president of market intelligence at cryptocurrency research and data firm Messari.
Musk’s endorsement of the digital assets and the resultant stock boom underscores his hefty market influence. The SpaceX CEO effectuated a similar unprecedented rise of the meme-currency Dogecoin, which began in 2013 as a joke based on the popular “doge” meme. After calling it “the people’s crypto” on Twitter, Musk continued to discuss Dogecoin in interviews.
“Fate loves irony,” he said on the social audio app Clubhouse. “The most entertaining outcome and the most ironic outcome would be that Dogecoin becomes the currency of Earth in the future.”
With Musk’s joking support, the stock rallied 65% in 24 hours to a record high of $0.083745 on Sunday. Dogecoin achieved a market value of over $9.5 billion, briefly topping $10.7 billion on Sunday to become the No. 10 digital coin on CoinMarketCap’s ranking.
Tesla did not acknowledge a timeline for the proposed changes, stating only that it would begin accepting bitcoin in “the near future.”
