Has the mainstream finally accepted bitcoin?
For months, there’s been a trickle of news about mainstream businesses getting involved in cryptocurrencies. In the past weeks, it’s turned into a flood. And that helped push the price of Bitcoin to a new all-time high above $50,000. Bitcoin crossed the $50,000 level early Tuesday but backed off highs. The cryptocurrency rallied as high as $51,693 early Wednesday, with prices up about 5% and holding well above $51,000, and reached a high of $52,159.29 at the time of writing on Friday, according to CoinDesk. The cryptocurrency has gained 76% since the start of the year, following an increase of nearly 300% in 2020.
Indeed, the surge followed news that several high-profile investors and institutions are having some sort of connection to Bitcoin.
High-profile individuals and institutions owning bitcoin
Perhaps the most significant driver on the bitcoin news came from the owner of the most valuable car company on the stock, Tesla. Tesla CEO Elon Musk has lately signaled a strong interest in bitcoin and other cryptocurrencies.
Tesla announced that it is holding some of its cash in bitcoin rather than traditional currency and might soon accept the cryptocurrency as payment for its cars. Tesla expects “to begin accepting bitcoin as a form of payment for our products in the near future … which we may or may not liquidate upon receipt,” according to its annual filing with the Securities and Exchange Commission.
The automaker also revealed that it is holding $1.5 billion in bitcoin on its balance sheet as part of a move to “invest a portion of (the company’s) cash in certain specified alternative reserve assets.” Tesla lists $19 billion in cash and cash equivalents on its balance sheet as of December 31.
Mastercard is bringing bitcoin to the checkout counter. The credit-card company announced on Wednesday that it will support “select cryptocurrencies” directly on its network at some point later this year.
Though Mastercard didn’t provide specifics, the company said the process might work something like this: When a customer wants to buy an item with bitcoin, Mastercard’s crypto partners will convert the digital currency into traditional currency and transmit the funds over Mastercard’s network.
This change “will allow many more merchants to accept crypto” as well as “cut out inefficiencies, letting both consumers and merchants avoid having to convert back and forth between crypto and traditional (currency) to make purchases,” Mastercard said.
BNY Mellon - America’s oldest bank
The United States’ oldest bank, BNY Mellon, which dates back to Alexander Hamilton’s founding of the Bank of New York in 1784 – announced Thursday it formed a “digital assets” unit. BNY will begin helping clients address needs related to the growth of digital assets, including cryptocurrencies, at an unspecified date later this year.
Roman Regelman, Mellon’s CEO of asset servicing said that client demand and clearer regulation “present a tremendous opportunity for us to extend our current service offerings to this emerging field.”
Rapper Jay Z & Twitter CEO Jack Dorsey establish a bitcoin development fund.
Rapper Jay Z and Twitter CEO Jack Dorsey announced they are establishing a bitcoin development fund. The pair is taking applications for a “blind irrevocable trust” focused on Africa and India, Dorsey tweeted. He promises the fund will have “zero direction” from himself and Jay Z and that the partners are searching for three board members. Dorsey and Jay Z are investing 500 bitcoin into the project, currently worth roughly $23 million.
Bitcoin is already in Dorsey’s portfolio. His other company, Square, bought 4,709 bitcoins in October 2020, equal to $50 million at the time. In 2018, the company expanded its mobile payment service Cash App to support bitcoin trading, even for users without a bank account. And in 2019 it launched Square Crypto, which awards grants to bitcoin developers and designers.
What else is happening in the bitcoin world?
- Apple Pay users can now pay in Bitcoin.
- MicroStrategy disclosed it plans to offer $600 million of convertible debt to buy more Bitcoin. The enterprise software company already owns nearly 72,000 units, worth nearly $3.5 billion Tuesday.
- China-based 500.com company announced it would acquire Blockchain Alliance Technologies Holding Co., a Cayman Islands-based Bitcoin mining and services operator.
- Blockchain Alliance Technologies Holding Co., a Cayman Islands-based Bitcoin mining and services operator.
- Twitter is reviewing other new uses of the digital currency, including employee pay, an executive said in an interview
Is Bitcoin becoming mainstream?
There is no doubt that Tesla’s large investment in bitcoin boosted its confidence. Analysts believe that as more and more companies start accepting bitcoin, its demand will increase in a market that is currently limited in supply.
Still, some notable investment institutions, notably Bank of America, have called the crypto rally “the mother of all bubbles.”