Should you buy Bitcoin after Musk’s latest tweet?
- Bitcoin recaptured the $40,000 level after Elon Musk said Tesla could accept it again as payment.
- Bitcoin also received its first update in four years: the Taproot upgrade will take effect in November.
- The upgrade will mean greater transaction privacy alongside efficiency.
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Bitcoin BTC/USD dominated financial media headlines yet again on Monday. The largest and most recognizable cryptocurrency traded above the $40,000 level amid two notable catalysts: a bullish tweet from Tesla CEO Elon Musk and the Taproot upgrade.
Naturally, trading above the $40,000 mark has many investors wondering if they missed out on a short-term rebound or Bitcoin still has plenty of room ahead to soar higher.
Let’s take a look and evaluate a trading thesis.
A rollercoaster of emotions
The value of BTC shifted tremendously when it was accepted, declined, and then re-accepted by Tesla. The mainstream appeal and real-world instance of its usage gave it the support it needed to move higher.
All was well for Bitcoin bulls as the price of the coin soared past $50,000 and hit an all-time high near $63,000 in April. But the past few weeks tell the complete opposite story with Bitcoin tumbling to $30,000 by May.
There is no doubt this is a rollercoaster of a ride. For long-term Bitcoin holders, this is merely par for the course as their investment thesis spans many years, if not decades. But for the rest of the investment community? Well, the volatility is here to stay — for now.
On June 13, Elon Musk said that Tesla will consider accepting Bitcoin provided miners use cleaner energy. This shouldn’t be confused with 100% confirmation that Tesla will accept Bitcoin once again. But this may not matter.
Now we come to see why Tesla’s involvement in Bitcoin is so critical for its value. Musk’s comments helped Bitcoin get back up in value to trade above the key $40,000 level.
Taproot upgrade matters less
On June 12, Bitcoin was also approved by miners around the globe with its upgrade known as Taproot, which is expected to take effect in November. The upgrade will allow for greater transaction privacy as well as efficiency, and it will unlock the potential for smart contracts, which has been one of the key features that made Ethereum so successful.
Despite the upgrade, the value of Bitcoin sat at around the $35,000 mark. What does this mean for the Bitcoin price outlook? It’s simple. Mainstream acceptance of BTC determines how high its value goes more than the underlying technology, although that will have a significant impact on it as well.
Should you buy Bitcoin?
We saw BTC go from $34,949 on June 13 to $40,535 which is an encouraging move higher for the long-term price outlook. It’s showing signs of an early bull run, and we expect it to climb up in value.
Even if the Tesla hype slows down over time, the Taproot update will definitely spark a lot of interest from decentralized application (dApp) developers, and we could even see different decentralized finance (DeFi) implementations on Bitcoin going forward to November.
After the Taproot update is completed by November, we should see exponential growth. As such, buying Bitcoin at around $40,000 might be a worthwhile investment for any serious trader that can withstand near-term volatility.