Tesla Buying Bitcoins: The Day Bitcoin Got Scary
Dingdong. The price rose by more than 3000 euros within a few minutes. The reason: Tesla bought bitcoins for $ 1.5 billion. The process that imaginative Bitcoiners have long prophesied is slowly emerging: the greatest financial upheaval of all time.
Tesla bought bitcoins for $ 1.5 billion. The world's largest automaker in terms of market capitalization adjusted its investment guidelines in January to make its assets more flexible and diversified. Shortly afterwards, he bought bitcoins for $ 1.5 billion.
Anyone who has observed Tesla CEO Elon Musk on Twitter should not be so surprised. Musk, who supposedly became the richest man in the world through the sensationally bombastic Tesla IPO, repeatedly tweeted about Bitcoin and Dogecoin, which triggered nice price jumps in Dogecoin; For a few days he replaced his Twitter biography with the hashtag “#bitcoin”, following the example of Twitter CEO Jack Dorsey, who has been doing this for a long time. Musk may be signaling among insiders that Tesla is investing in Bitcoin.
In addition, Tesla plans to accept Bitcoins as a means of payment and not necessarily to liquidate them after receipt, as is usually the case, but to HODL them on the company wallet.
The news became known about half an hour ago and is based on a report Tesla has filed with the SEC. The Bloomberg stock exchange service was one of the first to bring the report, and now it feels like it has taken over every second website. Within the next 30 minutes, the price jumped around $ 4,000, which was the largest price jump Bitcoin has ever made.
A number that is fixed. Not more.
What can I say? Bitcoin as a store of value and digital gold became mainstream.
MicroStrategy was not a tiny, but negligible in the global picture, with an eccentric, Bitcoin-obsessed CEO. The payment service provider Square was a size bigger. But now Tesla - Tesla is a huge house number that, despite the rumors, we didn't seriously expect.
Tesla is THE success story of the global automotive industry and THE hope for mobility without oil. The company is now signaling that it mistrusts the dollar and the euro, but trusts Bitcoin. The escape from the Fiat system started with MicroStrategy, Square has continued it - Tesla is making it official.
Bitcoin is the offer to companies and individuals to evade the logic of the fiat money system. You don't have to expose yourself to the expansive monetary policies of the central banks, nor the stock and real estate markets, which are feeling more and more like a bubble. Bitcoin is just one thing: a token that everyone agrees to use as a store of value, and whose scarcity is more resistant than any other type of scarcity.
At the moment it's really just about having a number that is fixed and that remains stable in this world of abundance and “let there be” money and stock prices. Everything else is a bonus.
Eerie mechanics
The Bitcoin offer sets a perverse mechanism in motion. It is reminiscent of a pyramid scheme, but it is no more a pyramid scheme than stocks: those who get out first will benefit extremely when others follow suit.
MicroStrategy invested several hundred million dollars in Bitcoin in August 2020. The amount has now quadrupled. Square's investment went just as well. Even Tesla, which bought bitcoins in January, should be up today with a jump of almost 10 percent.
The exit of companies from the Fiat system puts this under pressure. The less willing companies are to hold dollars, the less they want dollars from their customers, the lower the demand for dollars. This can end in a downward spiral: the lower the demand for dollars or euros, the lower the value, and the more central banks have to generate money so that states can service debts and banks remain liquid, and the more money there is, the less it is worth something. And so on. Bitcoin is not the cause of the decline of fiat currencies - but likes to lead them to their grave.
The example of Nigeria shows how quickly Bitcoin can put pressure on a national currency if it begins to replace it in important areas. Coupled with, for example, China's drive to establish the yuan as East Asia's reserve currency, the flight of large companies to Bitcoin could accelerate the decline of the established fiat currencies.
The great upheaval
At the moment it is still sensational when a company holds bitcoins in a daring way, as we know it from daring business people like Elon Musk. Should the process continue, it will be considered innovative, then it will be normal to express its innovativity through the Bitcoin investment. Eventually, it will be natural to switch part of the company's portfolio into bitcoins, and in the end it will be considered daring not to do so.
It doesn't have to be that way. But this could happen if the process initiated by MicroStrategy, Square and now Tesla becomes a sure-fire success.
Since the companies that buy first benefit tremendously when others buy after them, all of this could lead to a huge shift in market power. Just a simple example: How many batteries can Tesla give its customers at half price if the Bitcoin price doubles? How many kilowatt hours of free electricity can Tesla give car buyers? How many researchers pay to develop and patent better batteries? And so on.
If the German automotive industry then follows behind, at, say, 80,000 dollars, and also invests billions - then Tesla will make billions more in price gains. And so on. If, on the other hand, the German automotive industry never invests because it understandably does not want Tesla to win - but the process continues anyway, then at some point it will be sitting on worthless euros. That’s even worse. Not investing in order to prevent others from getting richer may at some point no longer be an option at all.
And that doesn't just happen in the automotive industry. At some point, there will be no more industry that does not get caught up in this suction, and in each and every one of the companies that invest first will eat the others.
Could it be that the greatest financial upheaval in centuries has just begun?