Tesla’s bulging Bitcoin buy could be the spark that derails the stock market

This article by Gavin Brown, Associate Professor in Financial Technology, University of Liverpool, is republished from The Conversation under a Creative Commons license. Read the original article. 

Here comes the gold rush

After Tesla announced it has invested US$1.5 billion in bitcoin (BTC) and expects to start accepting the cryptocurrency as a payment for its electric vehicles in the near future, the bitcoin price went soaring. It went from around US$39,400 to an all-time high of over US$48,000 in less than 24 hours.

The price is now up by over 50% in the first six weeks of 2021. Led by Elon Musk, Tesla’s investment is obviously in profit already: depending on the exact day of the purchase, it is likely to be worth over US$2 billion, pointing to a paper profit of over US$500 million. To put that in context, when the electric car-maker made its first-ever annual net profit in 2020, it was just over US$700 million. […]

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