Bitcoin At Record High After Tesla’s Investment

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What has happened?

Electric car maker Tesla announced Monday that it invested $1.5 billion in bitcoin,
Making it the biggest investment by a mainstream corporation into the most popular cryptocurrency.
In addition, the company also noted in a filing with the US Securities and Exchange Commission (SEC) that going ahead, it plans to start accepting the digital currency as a payment option for its products.

In its SEC filing, the company pointed out that last month it updated its investment policy to be more flexible in further diversifying and maximising returns on its idle cash.
As a part of this plan, it said it would invest in certain “alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds” and other assets.
“Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term.
Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt,” it said.
In its earnings report for the fourth quarter released last month, Tesla said it had cash and cash equivalents of $19.4 billion.

To begin with, crypto traders and investors are seeing the investment as a huge step in favour of institutional adoption of bitcoin.
It’s a sign to other companies that bitcoin is a solid reserve asset for any balance sheet.
Tesla’s investment though is also a testament to its CEO Elon Musk’s support to cryptocurrencies including bitcoin, the price of which went surging after he changed his Twitter bio to read “#bitcoin”.

The announcement of Tesla investing in bitcoin has even raised red-flags about Musk’s social media activity on cryptocurrencies.
The moves raised immediate questions around CEO Elon Musk’s behavior on Twitter recent weeks,
Where he has been credited for increasing the prices of cryptocurrencies like bitcoin and dogecoin by posting positive messages,
That have encouraged more people to buy the digital currencies.

While Tesla’s may be the biggest investment in bitcoin by a consumer facing company,
It is noteworthy that it does not hold the largest quantity of bitcoin for a single entity’s corporate treasury.
Virginia, US-based business intelligence and mobile software company MicroStrategy has around 71,079 bitcoins in its holdings, compared to Tesla’s 43,053 bitcoins.
US-based financial services tech firm Square holds 4,709 bitcoins.
Among the major firms to accept bitcoin as payments are Microsoft, telecommunications giant AT&T,
In addition to other companies like Pizza Hut, Subway, which accept bitcoin as payments in some of their branches in the US and Venezuela.
Notably, AT&T was the first major US company to provide cryptocurrency payment option to its customers.

According to Tesla’s own admission in its SEC filing, the prices of digital assets have been in the past and may continue to be highly volatile, including as a result of various associated risks and uncertainties.
“For example, the prevalence of such assets is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable.

Q) Which of the following statements regarding Bitcoin is correct?