Bitcoin: What Consequences Can Elon Musk and Tesla’s Announcements Have?

Finance
Tesla has invested the equivalent of $ 1.5 billion in bitcoin.

CRYTOCURRENCY: Tesla company announced Monday that it has invested $ 1.5 billion in bitcoin

  • A few weeks ago, the boss and SpaceX, Elon Musk, blew the price of bitcoin by simply showing the emoji of this cryptocurrency in his biography on Twitter.
  • On February 8, his auto company, Tesla, announced that it had invested the equivalent of $ 1.5 billion in bitcoin.
  • An operation which immediately caused an increase in the price of this virtual currency.

Never has a company of this size made such an investment in a cryptocurrency. On Monday, Tesla announced that it had invested the equivalent of $ 1.5 billion in bitcoin , the most popular of the virtual currencies . An announcement that comes after several signals sent directly by his fanciful boss, Elon Musk , who had already panicked the price in January by referring to bitcoin in his biography on Twitter .

Born after the 2008 crisis to overthrow – or at least compete with – traditional monetary institutions, bitcoin still divides industry players. Not recognized by central banks, this virtual currency suffers, among other things, from significant volatility . Can Tesla’s announcement change the perception and uses of bitcoin? And what impact can it have for all small bitcoin owners?

What impact has Tesla’s announcement had on bitcoin?

The effect was almost immediate. A few hours after the announcement of Tesla’s investment on Monday, the price of bitcoin soared 20% in 48 hours , reaching its all-time high of over $ 46,000 on Tuesday. “This is an important announcement. Even if this is not the first investment of this kind, it is the first time that a company of this size, which weighs nearly 800 billion dollars on Wall Street, has made such a move, ”analyzes the economic journalist Belgian Gilles Quoistiaux, author of Bitcoin & cryptomonnaies, the practical guide for the beginner investor.

Beyond this single investment, Tesla also intends “to start accepting bitcoin as a means of payment when purchasing its products in the near future”. For Gilles Quoistiaux, this decision, more than the investment in itself, could in the short term “make bitcoin more credible”: “The initial objective of the creators of bitcoin was to make it a bargaining chip. peer to peer and no longer depend on traditional banks. But for now, the possibilities of buying bitcoin remain very limited . “If Tesla makes it possible to buy one of its car models in bitcoin,” it can change things, “concludes the journalist.

Is bitcoin establishing itself as the new “digital gold”?

With currently around 18.6 million bitcoins in circulation, this cryptocurrency managed on a decentralized network can be considered “as the new digital gold” estimates François Longin, professor of finance at ESSEC and co-author of an article on this subject. in 2019 . Contacted by  20 Minutes,he develops: “With each crisis, we observe a surge in the valuation of bitcoin, individuals and companies in certain countries understanding in practice the interest of holding a currency independent of that of their country”. A valuation like gold, “often considered a safe haven against crises,” he continues. An analysis confirmed last year, according to him, with the evolution of bitcoin in the midst of a global pandemic, since cryptocurrency “has almost quadrupled in 2020”, he notes.

However, is it time to invest (and is it still possible?)

If Tesla’s announcement can help give bitcoin its glory, this cryptocurrency remains subject to significant volatility. “We must remain cautious, points out Loïc Sauce, professor-researcher in economics at ISTEC. These announcements triggered a wave of optimism and upward pressure on the price of cryptocurrencies and more particularly of bitcoin. But, as always, a correction is to be expected. Perhaps even a fairly strong correction […]. My advice would be to wait to enter the market ”.

On its site, the AMF (Autorité des marchés financiers), recalls that the price of bitcoin “can vary upwards or downwards in a very short time and is largely unpredictable. In particular, you can lose a lot of money ”. In 2018, the price had notably fallen by 80%. : “Not being a legal tender currency, you do not have the guarantees offered by central banks either. Likewise […], you are not protected in the event of bankruptcy of your intermediary, ”adds the AFM. But the purchase of bitcoins, whole or in fraction, is still possible and digital portfolio management platforms have multiplied in recent years.

Journalist Gilles Quoistiaux also warns: “Investing in cryptocurrency is relatively simple. But you have to be careful of scams which are particularly numerous when the price starts to flare up. Finally, another element to take into account, a bitcoin issuance ceiling was set at its creation. It can never exceed 21 million bitcoins. “With 18.6 million in circulation, we have already exceeded 80% of bitcoins in circulation. But even if the calculations are difficult to carry out, it is estimated that this limit will not be reached before the year 2140 ”, specifies Gilles Quoistiaux.

And what is happening with this other cryptocurrency, the “Dogecoin”?

It all started as a joke in 2013. Two engineers from Silicon Valley, Billy Markus and Jackson Palmer, code in less than 3 hours a cryptocurrency system bearing the image of one of the Internet’s most famous memes , the nice dog with questionable grammar, Doge . At the start of 2021, the stock market internet users behind the soaring GameStop share set their sights on Dogecoin, with a price multiplied by 20 since January 1. Elon Musk is there, again, from his tweet, adding to the madness, followed by the American rapper Snoop Dogg, who became for the occasion “Snoop Doge”.

With a capitalisation of nearly 10 billion euros, Dogecoin has just entered the top 10 cryptocurrency. In the United States, you can buy them directly through the free Robinhood trading app. In France, it’s more complicated, since you have to go through an intermediary exchange platform to buy bitcoins or ether (another cryptocurrency), then exchange them for Dogecoins. However, the latter are hardly accepted anywhere as a means of payment, and the stock of tokens is not limited, unlike bitcoin. In an interview with the Wall Street Journal , even Billy Markus – who is no longer involved in and no longer owns the Dogecoin community – deems the current valuation to be “absurd.”

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