Why did Tesla invest in Bitcoin?

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This question has been the talk of the town from a few days now. Elon Musk’s Tesla (the electric car company) recently bought Bitcoin worth of $1.5 Billion. That is huge! Tesla is now the first major company to invest in the cryptocurrency, Bitcoin, with such a whooping amount of money. Not only has this, but he also announced to accept Bitcoin as a payment method in the near future. Why did he do that?

In this article, we are going to explain a few reasons that might be the force behind this massive move in the world of cryptocurrency especially Bitcoin.

1.    Diversification Strategey:

This investment by Tesla in Bitcoin is being called as “diversification strategy” which will bring a very decent return to the company. Just like MicroStrategy, a US based software company which bought $250 million back in the day and it is now valued at $3.1 billion. Elon and co must have waited for it, and made their move at the right time after the continuous progress of Bitcoin. And as experts have predicted “Bitcoin is here to stay.” However the company is well aware of the volatility of Bitcoin but still hopes to get maximum profit as Bitcoin’s priced soared up to 62% so far this year.

2.    Hedge against the US Dollar:

This investment by Tesla can be a hedge against the World’s reserve currency that is the US Dollar. Tesla believes that the future of payment methods will be Bitcoin and cryptocurrency. All these fiat currencies might die out in the near future. His investment means the attraction of many world organizations and individuals to look up to cryptocurrency and invest in it on a big level.

3.    A stunt for public attention?

This move by Tesla is being regarded as a political football, a senior market analyst Craig Erlam calls it a “publicity stunt” and states that, “Thankfully, Elon Musk on Monday once again ensured no one would be bored, with the unexpected announcement that Tesla will buy bitcoin and accept them as payment for vehicles.” While we are not sure of the actual reason, we still cannot ignore such multiple possibilities.

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