Bitcoin, the world's largest cryptocurrency has surged after Elon Musk announced that a brand-new Tesla vehicle can be purchased with Bitcoin in the US.
Tesla CEO Elon Musk says that Tesla vehicles can be bought with cryptocurrency. Bitcoin prices surged 3.55% immediately, following his tweets on Wednesday.
"You can now buy a Tesla with Bitcoin", tweeted Musk on Wednesday. Those outside the US can also buy a Tesla with cryptocurrency later this year, says Musk in his tweet. When bitcoin is used as payment for Tesla, it will be retained as bitcoin and not as fiat currency, states Musk. Bitcoin prices have rallied almost 90% year to date, supported by Tesla's investment in cryptocurrency.
Elon Musk TweetsElon Musk, the CEO of Tesla and SpaceX, is one of the world's richest men who loves to create a stir in the crypto market through his tweets. In his SEC filing, he had reported that Tesla had invested $1.5 billion in Bitcoin. The investment is to maximize returns, says the electric car maker.
Eon Musk has around 45 million Twitter followers. When he changed his Twitter bio to #bitcoin on January 29, the price of Bitcoin rose sharply. His tweets can move the cryptocurrency prices.
In February 2021, Musk had announced through a tweet that he had invested $1.5 billion into Bitcoin through Tesla, which moved bitcoin prices to around $58,000, almost double the January value at $29,000.
His tweet with a picture of Dogecoin along with a single word "Dogecoin" brought a similar result in December 2020. A mere tweet about Dogecoin on social media saw a surge in its value.
His tweets have not only bought a surge in prices, but it has also caused a sharp decline. In December 2020, a tweet stating that bitcoins are "overvalued" brought down its prices sharply. Bitcoin had crossed the $1 trillion market capitalization, and prices crashed after Musk voiced his opinion that the price value of bitcoin and ethereum seemed high.
If a single tweet can bring a surge in Bitcoin market capitalization, another tweet may wipe out its value similarly, warn experts.
Bitcoin by Tesla
Tesla operates directly in Bitcoin nodes and uses internal and open-source software states Musk. You can now purchase a new Tesla electric vehicle with Bitcoin payment in any part of the United States, says Musk.
It is the first big corporation to make such a move to use digital currency. Cryptocurrencies are very volatile, with prices fluctuating widely, and it is an unusual move, say experts. Countries like India are still bearish about cryptocurrency usage as it does not have a proper regulatory body.
With institutions showing more interest in bitcoin, the digital token has surged to new highs, above $59,000. Institutions investors say that Bitcoin is the best alternative to gold. However, analysts at JPMorgan Chase & Co warn investors about the volatility in Bitcoin prices. Investors should be prepared for prices to surge suddenly and drop as sharply as their rise. Big names like Morgan Stanley, Visa, and JPMorgan are showing interest in the crypto market.
Elon Musk's Ratcoin
Elon Musk unveiled his own cryptocurrency, "Ratcoin". The digital currency Ratcoin went public on February 18 and is creating waves in the crypto market. Musk's influence on social media has helped him create a flutter with his own currency. While other coins will depend on demand and production in the real-world, Ratcoin prices will depend on Musk's twitters, say experts. It is also noted that the digital coin was developed all by himself, without an algorithm and help from engineers.
BTC/USD
Bitcoin had a roller coaster ride in the past and has moved to new highs in 2021. Bitcoin was trading at around $30,000 in January and has surged to above $60,000 in March 2021.
Bitcoin pulled back towards the $51,000 levels after facing resistance at $54,000 on March 22. It has slid almost 4.7% and is at a two-week low. The world's largest crypto has come down 17% from its record high at $61,000. On Wednesday, the largest crypto saw a brief spike after the announcement from the Tesla CEO to accept bitcoin as payment.
ETH/USD
The ETH/USD pair was at 14,000 towards the end of February and has moved to $1,900 in mid-March 2021. The pair was unable to move past the $1,800 last week and dropped to $1,600 on March 25.
DOGE/USD
The DOGE/USD pair moved to $0.07 in February 2021, following Musk's comments on Dogecoin. It has dropped lower to $0.05 in the current month.
Other coins like Polkadot, Cardano's ADA, Binance Coin, and Ripple's XRP saw a decline in value between 3% to 10%. The stock-markets are seeing a sell-off that has also spread to cryptocurrencies say, experts. Just as investors are converting their shares into cash, crypto investors are transferring their digital assets into money.