Can Bitcoin price survive without Tesla?
- Tesla suspended vehicle purchases through the use of Bitcoin.
- Tesla CEO Elon Musk expressed concerns related to the use of fossil fuels in Bitcoin transactions.
- Tesla will not be selling, and they are looking for other cryptocurrencies which use 1% of Bitcoin energy
On Feb. 8 Tesla (NASDAQ:TSLA) purchased $1.5 billion worth of Bitcoin as part of a move to include the digital currency in its balance sheet and accept Bitcoin from Tesla customers. This sparked huge interest in blockchain as a whole, and BTC raised its value by 20%. In fact, following the announcement, the price of Bitcoin BTC/USD reached $44,200.
Tesla’s move to accept Bitcoin as a form of payment pushed other corporations to follow suit. But Tesla CEO Elon Musk’s recent decision to suspend Bitcoin transactions has many Bitcoin investors wondering if this will put an end to corporate acceptance of the coin.
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Can Bitcoin survive without Tesla? If so, is the recent weakness in Bitcoin price a buying opportunity? Let’s discuss.
Bitcoin is in a bear market
On May the 12th, 2021, Tesla announced on Twitter that it is suspending vehicle purchasing through Bitcoin. At that time, BTC had a value of $57,027 and one day later it was trading at $48,993. The selling momentum continued with the price of Bitcoin trading at around $44,000.
Bitcoin is now down more than 20% from its highs of around $64,000 which implies it entered into a bear market.
Should you buy Bitcoin now?
At the time of writing, Bitcoin’s value has been steadily dropping and is now valued at $44,012. It seems as if any social media post by Elon Musk and his company can drastically shift the value of a certain cryptocurrency, and given the fact that they just dropped it from their system, we can expect it to drop even lower.
During its peak, we saw it go up to $63,729, but after this update, we should see it drop even more in value in the foreseeable future. This does not mean that it will not get the chance to hop back in value in the future.
It could potentially be a “buy” if you are expecting to keep it for a long time, but in the short term, and this is especially the case if it drops under $40,000, it’s a hard “sell” signal for investors. In any case, this is one of the biggest and most volatile currencies on the market.
The future of Bitcoin
Bitcoin has potential in the future, assuming more companies actually end up adopting it instead of dropping it. Due to its popularity, and the fact that even the general population knows about it, it could be a smart option for more companies to implement it.
Yet at the same time, a major trend of companies focusing more on ESG (environmental, social, and governance) implies that management teams could also reject Bitcoin because of the environmental concerns Musk brought to the spotlight.
As such, buying Bitcoin at current levels is not recommended. Investors may need to stick to the sidelines and wait for more signs of clarity. If Musk ditches Bitcoin in favor of another currency, the price of Bitcoin could collapse.
On the other hand, if Tesla reiterates Bitcoin as part of its long-term plans, investors can still be able to buy Bitcoin at a discount compared to its all time-highs, albeit at a higher price compared to current levels. This is a reasonable tradeoff because it all but eliminates downside potential while offers the potential for a slightly higher return as Bitcoin will ultimately re-test its highs.