The cryptocurrency markets enjoyed a strong weekend, with Bitcoin’s price returning to the psychologically important $40k barrier on Friday for the first time since January 21. The most valuable cryptocurrency in terms of market value is currently selling for around $42,500, up 3% from yesterday morning and 15% from last week. Is there going to be any more good news?
Bitcoin Surges Above $40,000
As a result of the recent price surge, Bitcoin has now surpassed Facebook’s parent company Meta to become the world’s ninth most valuable asset by market capitalization. Gold is the undisputed number one asset, with a market capitalization of $11.4 trillion, followed by Apple, which has a market capitalization of $2.8 trillion. For much of last year, Bitcoin had a market cap of moreover $1 trillion, which was a much-recognized achievement.
The king cryptocurrency, which had been stabilizing for much of the previous week, surged to a three-week high today, rising to 3% as of writing. BTC/USD touched an intraday high of $44,000.00 during Monday’s session, as markets reacted to rumors that Tesla now owns $1.9 billion in bitcoin.
Bitcoin made a move after breaking through a $42,060 barrier for the first time since January 21.
Tesla Holdings Borrows $2 Billion
In its recently filed Form 10-K to the US Securities and Exchange Commission, the EV maker stated that the fair market value of its bitcoin holdings as of the end of 2021 was $1.99 billion. Tesla invested $1.5 billion in bitcoin during the first quarter of 2021.
Because Bitcoin is a digital asset, it is highly volatile. Tesla was certainly aware of this throughout 2021, as the firm disclosed $101 million in impairment losses relating to the digital asset’s value last year. After selling a portion of its holdings, the firm realized a $128 million profit on bitcoin sales in March 2021.
Last year, Tesla briefly accepted bitcoin as payment for its all-electric vehicles, but CEO Elon Musk eventually changed his mind due to bitcoin’s significant environmental impact. In contrast, Tesla noted in its Form 10-K that the company believes in the potential of digital assets such as bitcoin as an investment and a liquid alternative to cash.
The following is an excerpt from Tesla’s Form 10-K:
“We continue adapting our investment strategy to meet our liquidity and risk objectives, such as investing in U.S. government and other marketable securities, digital assets and providing product related financing. In the first quarter of 2021, we invested an aggregate $1.50 billion in bitcoin. The fair market value of our bitcoin holdings as of December 31, 2021 was $1.99 billion.”
Tesla has been testing with another digital currency as a payment option but has yet to reintroduce pioneer coin payments for its products. Tesla launched the ability to pay for certain things in the Tesla Shop using Dogecoin, a meme-inspired cryptocurrency that Tesla CEO Elon Musk appreciates, last month.