Saturday 13 February 2021

Tesla has put $1.5 billion into BITCOIN! | Should you get in now?

After watching Meet Kelvin's video, I found it really informative where he talked about Tesla putting in US$1.5 billion out of their US$19.38 billion in cash and cash equivalents into Bitcoin to maximise their returns on cash that are not required for operating activities and also to expect to start receiving Bitcoin as payment on certain products and depending on laws. I find some points that he mentioned very informative in that they used maximise their returns on cash, is this to mean that putting your cash into bitcoin is a way of generating high returns as well.

Also, imagine if Tesla really accepts payment in the form of Bitcoin then their holding of BTC will slowly increase even without them actively buying more. Tesla also announced that they will be holding these assets for the long term, which is huge because it is here to stay. From the #bitcoin to dogecoin to GME, Elon Musk has really been breaking everyone's perception of how a CEO of a company should be. To the many, he is really disruptive with whatever he says making an impact. Some might see it as fresh while some might find him too volatile, in my opinion, I find that he is really interested in new things, things that will cause a disruption or make processes even shorter which will in turn improve our lives.

If Tesla is putting money in, are other institutions also putting money in as well?

$1.5 billion is not a small amount and for them to put it in during Jan 2021 could also mean that more institution will be putting any excess cash in or have already bought Bitcoin. As mentioned by Wealthdojo, many companies are sitting on huge heaps of cash and if they choose to put an amount into Bitcoin, imagine the impact/price volatility that will follow.

With him mentioning that Bitcoin can also be used to purchase Tesla cars/products means that it will slowly be adopted and with more people being able to use it, adoption rate will increase. Cryptocurrencies are currently not under the regulations of government and so Elon can tweet whatever he wants unlike in 2018 where he was fined by the SEC for tweeting that he might take Tesla private at $420. Wow, $420 price before the 5 for 1 stock split, currently Tesla is trading at about $800 plus after the stock split.

Apple may be the next big company to enter the cryptocurrency market, both by allowing bitcoin to be exchanged on its Apple Wallet service and investing some of its own reserves in units of the cryptocurrency said Mitch Steves, an analyst at RBC Capital Markets. apple holds a payment platform which they can integrate cryptocurrencies into hence many feel that it will be beneficial for them and especially so since they hold a substantial amount of cash as well.

Huge jump in prices? Should I get in now?

With Tesla announcing it's US$1.5 billion pump into Bitcoin, the price has went up like a rocket. Is it then still okay to put money into Bitcoin now? As always, Bitcoin is still a very volatile asset and your investment could very well drop by 30% or even more the next day. To ensure that you are comfortable with the amt of volatility is one thing, do also ensure that you are using money that you do not need in the short term and should not take up more than 10% of your total investments. There are many people out there who really stand by cryptocurrencies and say that by 2021 Bitcoin will hit US$60,000. Whether or not that happens, no one know, but if you are really risk adverse or have no extra money on hand, I would say to wait and build up first but don't FOMO. But if you are able to take on more risk and volatility, do go ahead as Bitcoin is definitely still in it's early stages and lots of changes/adoption might happen, to be part of it's growth is already so interesting, what more if you own some!


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1 comment:

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