In the last few months, Tesla has made waves in financial markets by announcing a $1.5 billion investment in Bitcoin at the start of the trading year. At the time of the announcement, in February 2021, the price of Bitcoin jumped to record highs as traders liked the increased adoption of Bitcoin by public companies.
Bitcoin as a Payment Method
The announcement followed PayPal’s decision in the second half of 2020 to accept four cryptocurrencies (Bitcoin is one of them) on its online payment platform. That was the key moment for Bitcoin’s new leg higher, as it rose from $10k to $60k in several months. PayPal’s announcement also signaled the increased adoption of Bitcoin as a payment method.
Earlier this week, Tesla made a similar announcement. It let the world know that it will accept Bitcoin as payment for its cars – in yet another sign of the increased use of Bitcoin payments.
How many cars will Tesla sell in Bitcoins? It remains to be seen. However, the idea is that Tesla goes beyond just a simple investment in Bitcoin – it becomes a hodler.
A hoarder is referred to as a crypto-investor that does not plan to sell its holdings anytime soon. Tesla also announced this week that it does not plan to sell its Bitcoins obtained by selling cars but plans to hold them for the long run.
The announcement triggered a move higher in Bitcoin, but that was quickly reversed in the day to follow. Most likely hoarders will be put to the test in the future, and the market participants will find out who managed to hold and who did not.
One thing is interesting both in the case of Bitcoin and Tesla. As the chart above shows, the number of Bitcoin “obituaries” (i.e., how many times Bitcoin was doomed to fail) gradually declined since 2017. If this means increased adoption and people getting used to the idea that Bitcoin is here to stay, then one may say the same for Tesla.