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Bitcoin Tops $40,000 on Elon Musk Tweet, MicroStrategy Purchase

Crypto market rises on renewed optimism by Elon Musk and MicroStrategy. Bitcoin reaches a two-week high, breaking above $41,000.

SageFX - Jun, 15, 21

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Principal Points

  • Crypto market rises on renewed optimism by Elon Musk and MicroStrategy
  • Bitcoin reaches a two-week high, breaking above $41,000

The cryptocurrency market has experienced a relative revival this week. Bitcoin reached a two-week high at $41,050 yesterday. The world’s largest digital asset received a solid boost from Elon Musk, who once again demonstrated his power to influence the fast-emerging market. Another factor that contributed to the rally in the price of Bitcoin was MicroStrategy’s completion of a $500mn offering of junk bonds to purchase another stash of fresh bitcoin from the market.

On Sunday, bitcoin was floating in its consolidation zone under the $40,000, as the milestone price level was keeping a lid on the asset for the past three weeks. Before the closing of Sunday’s bitcoin trading, Elon Musk released a fresh tweet that was immediately reflected in the price of the digital currency.

“When there’s confirmation of reasonable (~50%) clean energy usage by miners with the positive future trend, Tesla will resume allowing Bitcoin transactions,” Elon Musk said on Twitter as a response to criticism that he took advantage of the rise of Bitcoin just to sell a large portion of Tesla’s Bitcoin stake. The news that Mr. Musk, under certain conditions, would allow Bitcoin to be used as payment for Tesla’s cars arrived roughly one month after the billionaire stated the EV maker would no longer accept bitcoin due to the negative environmental impact of bitcoin mining.

Bitcoin Registers a High

The about-face statement on Sunday pushed the price of Bitcoin higher by nearly 17%, from $34,700 to over $41,000 as market participants flocked to the asset despite growing criticism of Elon Musk’s sway over the digital asset market. In recent weeks, crypto circles have become wary of Mr. Musk’s Twitter pronouncements as they have caused steep losses for many of his followers who have taken his word as investment advice.

Adding to the cryptocurrency buying wave was MicroStrategy’s purchase of bitcoin worth $488mn bought with the proceeds of a $500mn bond sale. The offering was completed yesterday and with the newest addition of over 10,000 bitcoins, MicroStrategy would be holding over 100,000 coins of the world’s largest cryptocurrency.

“MicroStrategy Completes $500 Million Offering of 6.125% Senior Secured Notes Due 2028,” MicroStrategy CEO Michael Saylor announced on Twitter. “MicroStrategy’s existing approximately 92,079 bitcoins are being held by a newly formed subsidiary, MacroStrategy LLC,” he added.

MicroStrategy has been an ardent bitcoin investor for over a year. The latest bitcoin acquisition round is a result of a third bond sale by the software intelligence company. The successful offering on Monday fueled a 15.89% rally in MicroStrategy’s stock, bringing its share price to $598.49.

Meanwhile, hedge fund manager Paul Tudor Jones, speaking on CNBC, said he is comfortable with having 5% of his assets allocated to Bitcoin. “I like bitcoin as a portfolio diversifier,” Mr. Jones said in the interview.

“I like the idea of investing in something reliable, consistent, honest, and 100% certain. So, bitcoin has appealed to me because it’s a way for me to invest in certainty,” the hedge fund manager commented.