The Richest Person In The World Believes In Bitcoin
It’s incredibly unusual to see a company take this kind of risk with corporate cash.
This week, we “crossed the chasm” from early adopters to mass adoption, which is huge news for Bitcoin as Tesla CEO Elon Musk, currently estimated to be the world’s wealthiest person, disclosed that his company bought $1.5 Billion in Bitcoin. It’s a big bet that seems to have paid off in the short term, as the company’s holdings grew by 35% immediately after the news. Tesla made more money from this one trade than from its entire 17-year history as a car maker.
It’s also a massive vote of confidence in bitcoin. It’s incredibly unusual to see a company take this kind of risk with corporate cash.
Elon has been one of the biggest supporters of cryptocurrencies in recent months. His Twitter feed regularly features support for currencies like bitcoin and Dogecoin. He’s also been instrumental in rallying other celebrities to the crypto cause. Rapper Snoop Dogg, actress Lindsay Lohan, and KISS frontman Gene Simmons have all shared their enthusiasm this week.
It’s been interesting to see how far Elon’s Bitcoin education has come along in just a few short months. On December 20, 2020, Elon replied in a Tweet to Michael Saylor, the MicroStrategy CEO (mobile software and cloud-based service company), who urged him to convert the Tesla balance sheet from USD to BTC, which would help the company diversify its portfolio. Elon responded by saying, “Are such large transactions even possible?”
Alongside Tesla’s $1.5 Billion investment in Bitcoin, the company also announced that it would accept Bitcoin as payment and may keep all of it and not sell it. More and more institutions are adding crypto payment options to their offerings, another sign that the cryptocurrency market is maturing. But right now, Bitcoin is such a volatile asset that I can’t recommend using it as a form of payment.
How’s this for buyer’s remorse: In 2013, a used Toyota Prius sold for 1,000 BTC, an amount worth about $50 million in today’s market. See what I mean about volatility? Let’s let the dust settle before we proclaim bitcoin the currency of the future.
Bitcoin is up 30% over the past seven days, as Elon’s endorsement helped push us past the $45,000 price resistance point. I don’t think the roller coaster ends here. Moving forward, I see us facing some resistance once the price of Bitcoin reaches $57,500, but we will see a spike to the next resistance at $89,000 and as high as $160,000 before taking a pull back towards year-end. I think there are going to be too many retail and mining sellers which will push the price back below $100,000 by the time we close 2021. We just have too many speculators and margin in the system which will have to be sold by year’s end.
Bitcoin (and other cryptocurrencies) are better considered as a store of value, and with these eye-popping numbers week after week, I’m going to continue HODLing. I buy BTC every week no matter what the price is.
The crypto-financial freedom movement is moving closer towards more mainstream adoption every day. Many investors like Elon are going through their Bitcoin educational process. Meaning the thought of diversifying one’s portfolio through bitcoin is NOW something that is crossing investors’ minds. Until then, our community will continue to HODL, earn yield and enjoy the fruits of our patience.
P.S. ADA and DOT skyrocketing has all to do with the rumor that both will be listed on Coinbase very soon, I would say that the 200% price increase probably already prices in most of the value of such listing, so stay away from these two until there is at least a 30% correction.