Tesla drove another bitcoin rally by purchasing some of the cryptocurrency. The bitcoin rally has slowed now since Tesla’s purchase, although the price remains above $40,000. Tesla CEO Elon Musk appears to have gotten the idea to buy bitcoin from MicroStrategy Chairman and CEO Michael Saylor.
Tesla drives bitcoin rally after buying
Tesla's bitcoin purchase triggered a rally that saw the price approach $50,000 as many investors saw it as moving the cryptocurrency into the mainstream. On Monday, the bitcoin price jumped 20% after Tesla revealed in a regulatory filing that it had invested $1.5 billion in the cryptocurrency.
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The automaker also announced that it would eventually start accepting bitcoin as a payment method for its vehicles. The 20% bitcoin rally due to Tesla's investment was the largest daily increase in over three years, according to Reuters. The cryptocurrency peaked at $48,216, which is almost enough to buy a Model Y.
Michael Burry of Scion Asset Management tweeted a suggestion that Tesla bought bitcoin to distract from regulatory concerns in China. Chinese regulators have called on the automaker to discuss quality issues with its vehicles. Chinese consumers complained about acceleration irregularities, battery fires, failures with software updates and other issues, according to a government notice posted on Monday and cited by TechCrunch.
Where Musk got the idea
CNBC notes that Tesla wasn't the first major company to buy bitcoin. Musk just became an official supporter of the cryptocurrency recently. He may have gotten the idea from MicroStrategy, which has been touting the cryptocurrency to corporations for some time. Saylor tweeted at Musk about a month ago.
According to Decrypt, the value of MicroStrategy's bitcoin holdings has now surpassed $3 billion. The company initially bought $250 million worth of the cryptocurrency in August 2020 and has continued to buy since then. MicroStrategy's stock price has also skyrocketed in recent months, climbing from about $125 to over $1,200 per share.
Cointelegraph reported that the company met with public companies last week to talk about bitcoin as a store of value. Saylor said representatives from more than 1,400 firms were scheduled to attend the event. He added that he had never seen so many CEOs sign up to attend one of MicroStrategy's events. Institutional interest in bitcoin has soared over the last year or so amid concerns about inflation caused by the unprecedented amounts of stimulus rolled out during the pandemic.