Bitcoin is hitting new highs today fololowing a 10-K filed by Tesla (NASDAQ:TSLA) that revealed it had purchased $1.5 billion in Bitcoin and may purchase other digital assets in the future. Simultaneously, Tesla said they expect to commence accepting Bitcoin as a method of payment for its products.
Elon Musk, Tesla founder and CEO, has long been engaged with the crypto sector frequently commenting on Bitcoin and other digital assets on Twitter. Musk, a true entrepreneur and never one to worry about sharing his opinion, has emerged as one of the most prominent advocates of cryptocurrency.
As the news filtered out that Tesla had purchased Bitcoin, shares in the company moved higher but Bitcoin was the bigger beneficiary trading at almost $44,000 – a new all-time high.
Crowdfund Insider received some feedback on the Bitcoin acquisition by Tesla with crypto insiders describing the news as growing validation of crypto as well as BTC.
Leah Jonas, Head of Partnerships at Celsius Network, shared the following thoughts about Tesla buying Bitcoin:
“Tesla’s investment into Bitcoin cements crypto into both history and the future as not only a fundamentally safe store of value but an asset with an infinite amount of applications yet to be discovered. I see this as the door opening wide for crypto companies with B2B services, like my companies, to put their products to the test and usher in the next wave of adoption in partnership with Tesla.”
The CEO of Celsius Network Alex Mashinsky, added:
“The richest person in the world just told you he does not believe in holding dollars as a long term store of value. Tesla buying BTC is another step on the road to mass adoption of Bitcoin as the main non-correlated store of value. We have heard from the smartest investors in the world and now we have heard from the richest people in the world, they all agree that having 5-10% of your net worth in BTC is a critical part of a well diversified portfolio. “
Jean-Michel Pailhon, Vice President Business Solutions at Ledger, called the news a seal of approval that crypto is a serious asset class:
“Tesla’s move further gives the industry validation and shows crypto’s resiliency as an asset class. The battle of custody and safeguarding these volatile assets will be the next thing to watch. Tesla could either pull it off with an in-house solution though they may suffer from inflexibility compared to other infrastructures.”
David Wachsman, CEO and founder of Wachsman, said that enterprise adoption of crypto is the theme of 2021 – at least so far:
“The narrative of Bitcoin as an inflation hedge continues to hold water among corporates and institutional investors, with prominent advocates for investing in Bitcoin as a treasury asset, such as MicroStrategy’s Michael Saylor likely driving this move by Tesla. Adoption begets adoption, and Musk’s investment in Bitcoin will significantly accelerate the feedback loop of institutional adoption legitimizing crypto assets. The signs of institutional fear of missing out (FOMO) on crypto as the next major asset class are already visible, and it will be interesting to see if this move prompts a wave of other enterprises and institutions to follow suit.”
Elon Musks decision to purchase $1.5 billion in Bitcoin is the catalyst that is driving Bitcoin to new highs said Seamus Donoghue, VP Sales and Business Development at METACO:
“Bitcoin as a corporate treasury asset is not yet a mainstream business strategy, but firms like Microstrategy and now Tesla are highly visible advocates of corporate treasuries allocating reserves to Bitcoin. MicroStrategy’s Bitcoin strategy sessions last week reportedly saw 1,400 corporate treasuries participating. It remains early but with such vocal sponsors leading corporate adoption, further adoption will follow much faster than currently expected.”
Donoghue believes the most credible objection for corporates to adopt Bitcoin as an asset class is the fact it is relatively small at around $800 billion in market cap.
“However, as the asset class grows, and it has grown 14% on the Tesla announcement alone, the liquidity concerns diminish making it eligible as an investment to a broader investor base. Such a virtuous liquidity cycle will draw in considerably more allocations as it grows,” said Donoghue.
Eric Kapfhammer, COO and Head of Polyient Capital, stated:
“Tesla’s Bitcoin disclosure could end up being looked back upon as the event that ensured cryptocurrencies crossed the chasm into the mainstream. Not only will the impact of this be felt across the corporate world, but due to Tesla’s high profile, it could end up being a trigger for popular retail adoption. The period of time between 2017 to present has seen a tremendous amount of progress on the development of the infrastructure layer that serves to enable cryptocurrencies to plug-in to the “real” economy. That infrastructure – technical, legal, financial, and regulatory – has set the stage for the recognition of cryptocurrencies as viable reserve assets within corporate treasury holdings. While each company will weigh the risks and rewards of introducing these assets into their portfolio differently, the fact that Tesla has jumped aboard the bitcoin train provides a high-profile comparable to at least facilitating that conversation. “
Konstantin Richter, CEO and Founder of Blockdaemon, noted that Musk is no stranger to crypto but the fact that Tesla is taking the position drives confidence not only for retail but also for institutions who may be considering dedicating capital to digital assets:
“We’re seeing momentum here where each new institutional participant to the Bitcoin market has to buy less BTC for more USD and still the market shows no signs of slowing down. This signals confidence to the retail market, but more importantly demonstrates the worth of hedging against macro-conditions by having Bitcoin on corporate balance sheets. This investment will accelerate discussions among corporate treasurers throughout the ranks of the S&P 500 to put plans to buy BTC into motion. It is likely that these new institutional inflows could push this Bitcoin rally to new heights.”
Richter believes that as Bitcoin continues making inroads, more investors will be looking to the fixed income and pension entities to fuel further interest and growth. “We are entering an entirely new phase of the market,” he said.
Incredibly bullish for crypto in general, said Luis Cuende, Co-founder of Aragon. This officially confirms crypto as a reserve asset for corporate treasures.
“Today’s news confirms the world’s wealthiest entrepreneur and his company going full-on crypto,” said Cuende. “With asset managers like Ray Dalio and entrepreneurs like Michael Saylor and Elon being bullish on BTC, more and more corporations will recognize it as a reserve currency for treasuries. Next, national treasuries will follow. The infrastructure for corporations to invest in crypto has been in place for years, so now it’s just a matter of time before corporations consolidate around BTC.”
Tesla’s purchase of BTC is another validation of crypto, echoed Philippe Bekhazi, CEO of Stablehouse. He believes Bitcoin is a Gold 2.0 in a world of poor monetary policy management.
“This further reduces the ‘job risk’ for CFOs who had considered this previously. It could even make it mandatory for them to consider it now. In many ways, this is a very bullish aspect of the Bitcoin as money story and Bitcoin as gold story and a hedge against sovereign state money inflation. 6% of all bitcoin is held in publicly listed entities and at least 20 corporate treasuries have stated publicly that they hold BTC including Square, Tesla and Microstrategy.”
There is no doubt that the game is quickly evolving, Bekhazi added.
“Perhaps regionally, Governments should support cryptocurrencies instead of taking a defensive stance (e.g. India’s rumors of banning all but India issued state coins) Also, banks will have to move quickly to accept companies that hold bitcoin, in the EU for example it is often that they block transfers to BTC onramps, and globally mentioning BTC in a business plan could block one’s bank account access.”
Precedent-setting declared Antony Welfare, Executive Director, Enterprise at NEM Software. Tesla’s purchase of Bitcion will have far reaching impact to global adoption of Bitcoin and crypto in general:
“A Tesla roadster is currently $250,000 which is approximately 5BTC, by the end of this bull market it will be more like 2BTC. With the lack of return from bonds or dividends and the significant returns available from “new financial assets”, corporate treasurers clearly believe that crypto and digital assets are the obvious asset class to look at next. This news, together with the expansion of ETH products (CME today launched Ether futures) and Bitcoin ETFs, indicates that blockchain based financial assets are part of the fiduciary duty of all corporate treasurers.”
Amber Ghaddar, PhD, founder AllianceBlock, said this is a new trend for corporate treasuries:
“This could look like an odd mix as traditionally corporate treasuries have a conservative cash management approach, allocating the majority of capital to low risk assets like money markets and T-bills. The increasingly low rate (close or below zero)and aggressive fiscal and monetary policy can be a headache to cash rich treasuries and can even destroy shareholder value. So it seems to me that more traditional treasurers should at least look at bitcoin for a small allocation within their alternative portfolio.
Ghaddar said that the streamlining of digital custodians this trend should continue – especially with more tech-oriented treasuries.
“With the current fiscal and monetary landscape, I wouldn’t be surprised to have an announcement from some of the tech giants Facebook or Google within the year but I think the road is still long for the more traditional treasurer.”
Of course, if Bitcoin continues to move higher as some pundits predict, Tesla and Musk will be lauded as brilliant investors ahead of the curve. If Bitcoin moves lower, well then, not so much. The filing with the SEC acknowledges the volatility of Bitcoin, and digital assets in general, but if inflation starts to rear its ugly head Bitcoin holders could end up being big winners. Let’s wait and see.