Bitcoin: Why More and More Companies Are Accepting It as Currency
- Author: Bryan Miller
- Posted: 2024-06-10
Bitcoin is that digital currency that most of us have heard about over the years. However, the talk surrounding it has been that it's simply a trend, and much like other trends, it will pass. However, over those same years, Bitcoin has continued to increase in value again and again. In fact, Billionaire and CEO of Tesla and SpaceX Elon Musk recently purchased a whopping $1.5 Billion in Bitcoin. When asked about the purchase, Musk stated that Tesla is planning to accept Bitcoin as real currency in the coming years. Understandably, the world took a second look at Bitcoin as something that may only be in its infancy and has yet to flourish fully. So, are you in?
What Are the Experts Saying?
According to Cathie Wood, the CEO & Chief investment officer of ARK investment management LLC, Bitcoin is within its "early days" in terms of its interest from institutions and large companies. In fact, during the Bloomberg Crypto Summit, Wood commented on how Bitcoin has an enormous amount of earning potential. She goes on to use Apple as an example of the magnitude of Bitcoin. Today, Bitcoin has a market cap of $950 billion, which is about half the valuation of Apple. Much of that confidence in Bitcoin is coming directly from the interest being shown by a variety of institutions.
Why Bitcoin is Being Seen as an "Insurance Policy"
Cathie Wood, during the summit, explained the very real possibility that the U.S dollar will collapse over the next coming years. This is being shown through consistent trends in the devaluation of the dollar over the past couple of years. That is why so many are seeing cryptocurrency as a form of "insurance policy" for when and if this actually occurs. Although the approval of Bitcoin as a legitimate currency is going to come down to whoever is appointed to the Securities and Exchange Commission position, it is likely that it will still creep in slowly into the mainstream.
Putting Their Money Where Their Mouth Is
Anyone can talk big about the potential of this or that cryptocurrency; however, it is only those who have taken the steps to place action behind their words that have been taken seriously. Cathie Wood, along with her company, Ark Investment, owns over 7.3 million shares of the Grayscale Bitcoin Trust. In fact, even before the 450% rally of 2020, Cathie woods had already taken action on her belief that Bitcoin would grow in value. In 2015, Wood announced that she would be doubling her investment in Bitcoin. At the time, Bitcoin was valued at $500.
Immune to Fear?
Often when bad news is reported on worldwide news, most stocks will take a dive. However, on Sunday, February 21st, Bitcoin jumped to over $58,350 per coin before settling down once again on Monday Tokyo time. However, figures such as strategists at JPMorgan Chase & Co. Nikolaos Panigirtzoglou stated that Bitcoin tends to have lower liquidity than the S&P 500 or Gold, for that matter. This means that even a tiny amount of flow of cash can have a major impact on the market price. It is this same theory that makes people wonder if Bitcoin will tend to rise and constantly fall in a dramatic matter. In fact, Elon Musk stated that Bitcoin prices "seemed high," but still calls it a "less dumb version of money."
Possible Doubts on Valuation of Bitcoin
As stated above, prominent figures such as Elon Musk have publically stated that Bitcoin may be overvalued at the current moment. In fact, just two days after the jump to $58,350, Bitcoin dropped an astonishing 17% in one day. This major dropped triggered a liquidation of the cryptocurrency across the world. Senior market analyst at OANDA, Craig Erlam, commented on how this occurred because it was an extremely overbought market.
Bitcoin, along with other cryptocurrencies, have enjoyed a strong growth cycle throughout 2020 and into 2021. Although the theories of Bitcoin being overpriced may have some merit, it has not stopped individual investors and companies from attempting to get into the cryptocurrency market. Much like Elon Musk and Cathie Woods, people believe that Bitcoin is still poised to be one of the biggest and most valuable currencies in the world.
