Bitcoin is finding its way into more and more of investors portfolios; from Tesla purchasing $1.5 billion worth of bitcoins; to the retail investor steady holding since the 2017 crypto craze. With bitcoin’s market capitalization closing in on $1 trillion; I think it’s time to go over 4 reasons why bitcoin crossed $50,000 for the first time.
1) The Tesla Announcement
Tesla announced February 8, 2021 that it was adding 8% of its cash to bitcoin; for a grand total investment of $1.5 billion. The reasoning behind this was in two parts; First, they mentioned that it’s another way to diversify their balance sheet; and second, they said they could be planning to accept it as a form of payment in the future. Tesla purchased the $1.5 billion of bitcoin from Coinbase, the San Francisco based cryptocurrency brokerage.
Today; Tesla’s investment is up roughly $750 million as the bitcoin price is around $52,000. Tesla and bitcoin in the same headline caused a ton of free publicity for both bitcoin and Tesla, and the price jumped from $38,000 to $48,000 in 24 hours. This announcement I believe could be a catalyst for other Fortune 500 companies to start putting a percentage of their cash reserves into this new asset class.
2) Jerome Powell
Jerome Powell is the head of The FED; he approved printing of approximately $3.5 trillion in stimulus payments; and approximately $9 trillion was injected into the hands of Wall Street firms in 2020. With all this money floating around, bitcoin soaked up a fair amount of this liquidity.
With inflation looming in the minds of Americans, it’s no wonder some are putting a percentage of their cash reserves into bitcoin; commonly referred to as “digital gold” or “internet money.” The bitcoin charge was fueled in many ways by Jerome; as for his thoughts on bitcoin; he’s says it’s gold’s biggest competitor.
3) Young People
Young people are investing with a 40 year time horizon usually; and with gold not really as readily accessible; young people are hopping on Coinbase; Cash-app, or Robinhood to buy what they believe is the future currency or at least the gold of the modern world. Young people were given lots of cash last year; many went straight to Amazon to buy something, but many purchased their first stocks and bitcoin.
4) More Understanding
This article isn’t to explain what bitcoin is; it’s to tell you why it hit $50,000. And in my opinion it’s because more and more people are realizing why it’s a better system. It’s cheaper and faster to send money with bitcoin; many are also realizing their will only ever be 21 million created.
The security and reliability of the network are unmatched; and it seems the more society understands how genius the anatomy of bitcoin is; I believe adoption will follow as more people understand it. There’s documentaries, YouTube videos, podcasts, Reddit forums all explaining and chatting about bitcoin, the internet is the voice of bitcoin and the story is being told everyday to someone new.
Thanks for reading, new article coming soon.
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