The man, the meme, the legend... Elon Musk is making crypto headlines (again). Bitcoin surged as much as 20% to a record high of $47K yesterday, after Tesla revealed it invested $1.5B in BTC. Tesla also said it'll start accepting the crypto coin as payment for its cars (casual). Tesla's not the first company to get in on Bitcoin, but it's the biggest so far.
1 BTC = 1 Model Y?... Tesla’s move isn't a total shocker: Elon has been a big crypto cheerleader recently, and his Twitter endorsements have been credited with boosting coins like BTC. But why would Tesla's board allow it to pour $1.5B of its $19B cash reserves into a volatile crypto? In PR speak: To “diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.” Human translation: "We have some extra cash and think it’s a good investment."
To go mainstream, a cryptocurrency must pass the "faith & acceptance" test... and Tesla's investment just brought Bitcoin closer to that. The US Dollar has value because it's backed by the government and controlled by the Fed. Bitcoin is a decentralized currency (aka: not controlled by a central bank), so it's value lies in people believing it has value. Tesla's latest move is a big vote of confidence: it could inspire other companies to invest and speed up mainstream Bitcoin acceptance. But if BTC crashes and Tesla loses on its investment, then it could have the opposite effect.