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Bitcoin Domination: The Rise of Corporate Adoption

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When Bitcoin came on the scene in 2009, not very many people paid any attention to it. A few people believed it was the next big thing, while some expected it to fade away within a few years. An overwhelming majority of finance professionals had dismissed it as just another interesting tech trick, not something that would disrupt the financial sector as we know it.

The Journey to $50,000 Bitcoin

As Bitcoin soared past $50,000 in the middle of February, those finance professionals were left stunned. Just ten years ago, one Bitcoin wasn't worth up to a dollar. And now? It's worth more than fifty thousand dollars. It's the single most significant asset appreciation story of the 21st century, and it doesn't look like it's stopping anytime soon.


The story of Bitcoin is made all the more impressive because it reached several all-time highs in 2020. In fact, by the ending of December 2020, many people believed that it wouldn't reach such highs again for a long while. But those people who thought that have been proven very wrong.

What’s Causing the Explosive Rise?

So, what's the cause of this explosive rise of Bitcoin? It surely cannot be explained by the regular market forces. There has to be a specific reason why the price of Bitcoin appreciated 20% within a single week. Thankfully, there is.


For one, the surge in the price of Bitcoin has been triggered by a "worldview shift" that was in part triggered by the coronavirus pandemic. Before this boom in price, the predominant worldview was that Bitcoin was merely a neat tech trick that had some utility, but was not necessarily a store of value. But that worldview is now changing.

Lower Barrier of Entry

One evidence of this change is the increase ofBitcoin ATMsall over the country. These ATMs make it easy to buy and withdraw Bitcoin using various payment methods such as debit/credit card and, most notably, cash. Historically, using cash has been challenging to use to acquire cryptocurrencies without going through expensive brokers or peer-to-peer transactions. The goal of these ATMs is to make selling and buying BTC to be as easy as withdrawing fiat currency from regular ATMs. And it seems like the rise of these ATMs is simply another example of the wider and increased adoption of BTC as a store and tender of value.

Tesla Bitcoin Investment

This worldview shift is also evidenced by big companies seeing Bitcoin as a legitimate store of value. Perhaps the best example of one of such companies is Tesla. Elon Musk, the CEO of Tesla, recently bought $1.5 billion worth of Bitcoin and said that his company would accept Bitcoin as a form of payment. The market probably won't get a bigger sign that Bitcoin is here to stay than that.

SEC Filing

In a filing with the SEC, the company said it bought Bitcoin as it gives them more flexibility to further diversify and maximize returns on their cash. That day, the company also announced that it would start accepting payments in Bitcoin for its cars—although that would initially be on a limited basis. This announcement made Tesla the first major automobile manufacturer to do so.

Investment Gains

The $1.5 billion worth of Bitcoin that Tesla bought would give it some level of liquidity in the coin once it starts accepting it for payment. Amazingly, the 1.5 billion worth of Bitcoin that Tesla bought is now worth more than 2 billion dollars. If Tesla were to cash in on that now, they would have made a lot more money from Bitcoin than they've made from selling cars— which is an incredible stat.

Elon’s Tweets

However, this purchase of Bitcoin isn't the only way Elon Musk has been involved in the "pump" of Bitcoin. He's also posted a lot of encouraging messages about Bitcoin, thus fueling a seismic rise in the coin. He's had to be careful, though, and his messages are often cryptic, as he doesn't want to be charged for fraud like he was in 2018 over some tweets.

Other Corporate Adoption

It's easy to look at the numbers that Bitcoin is doing and think that it's a one-off. You could also think that Musk is just being an eccentric billionaire who has nothing to do with his company's money. But Tesla isn't the first company to buy a massive amount of Bitcoin.


MassMutual

In December 2020, MassMutual, an old and traditional insurance company,bought a hundred million dollars worth of Bitcoin. Of course, it's nothing compared to what Tesla bought, but it's evidence of an increasing level of trust in cryptocurrency.


MicroStrategy

Interestingly, Tesla isn't even the leader when it comes to company Bitcoin investments. MicroStrategy, a publicly traded firm, owns as much as $3 billion worth of Bitcoin— and they’re not stopping there. On February 17th, 2021,MicroStrategy announcedthat it intends to raise an additional 900 million dollars in a convertible senior note sale offering. The net proceeds from the sale of the notes will go towards acquiring additional Bitcoin.


Apple Pay & BNY Mellon

Tesla, MassMutual, and MicroStrategy are just a few of the corporate entities whose activities have led to the rising price of Bitcoin. Some other services, like Apple Pay, have alsostarted to accept payments in Bitcoin. BNY Mellon has also said that it would hold Bitcoin and other cryptocurrencies for clients.

The FOMO Is Real

Another reason why Bitcoin is rising almost exponentially is something calledFOMO. It stands for theFear Of Missing Out, and it's usually in play when people rush to adopt something because they fear they may miss out on it. The large investments of companies like Tesla in Bitcoin have shown everyone else that Bitcoin is the future, and it is only smart to invest in it right now.

How Much Higher Will It Go?

But will Bitcoin continue to rise? The answer is nobody knows. However, many analysts, even ones that "believe" in Bitcoin, have warned that it is volatile. It certainly won't rise forever and would have to adjust to the market at some point. But when will that be? No one knows. 


March 3, 2021