Bitcoin spiked after Tesla Inc. announced a $272 million profit on digital assets following its $1.5 billion cryptocurrency investment.
According to the company’s earnings report, the company earned $101 million from selling the tokens, which it purchased for more than $1 billion earlier this year. Tesla was attempting to “prove liquidity of Bitcoin as an alternative to keeping cash on balance sheet,” Musk said on Twitter in a now-deleted tweet.
After Tesla’s chief financial officer reaffirmed the company’s commitment to the cyber currency, bitcoin gained 1.9 percent and traded above $54,000.
With its investment in Bitcoin, the electric vehicle manufacturer placed cryptocurrencies on the radar of corporate treasurers around the world. While some people still see Bitcoin as too risky to be equivalent to cash, Tesla’s Chief Financial Officer Zachary Kirkhorn said on an earnings call that the company believes in its long-term value.
“We do believe long-term in the value of Bitcoin, it is our intent to hold what we have long-term and continue to accumulate Bitcoin from transactions from our customers as they purchase vehicles,”said Tesla CFO Zachary Kirkhorn.
On the other hand, Musk has long been a vocal advocate of cryptocurrencies and revealed late last month that Tesla will begin accepting Bitcoin as payment for its automobiles.
According to the technical analyst Katie Stockton of the Fairlead Strategies consulting company, Bitcoin’s recovery could ignite momentum.
Stockton wrote in her “Cryptocurrency Compass” article on Monday that “the bounce should persist this week.” “However, given the recent loss of intermediate-term momentum, bitcoin is likely to face resistance below $62,000.”
Stockton believes that $40,000 would be the price point where buyers will start scooping up what they consider to be cheap BTC, with the $60,000 price point acting as a degree of “resistance” where some traders may start selling.
“As a gauge of downside risk inside the long-term uptrend, support is around $42,000,” Stockton said.