Experts assess the implications of Tesla’s Bitcoin investment

Tesla, Elon Musk’s company, invested $1.5 billion in Bitcoin. In the future, it plans to integrate the premier cryptocurrency as a means of payment for its products. In light of the news, Bitcoin reached a new all-time high—above $44,800.

ForkLog spoke with experts about how this could affect Bitcoin’s dynamics, and whether regulators would raise questions about previous tweets by Musk, in the wake of which the asset’s price had repeatedly risen. They diverged in assessing the legality of Elon Musk’s tweets about Dogecoin and Bitcoin, after which the coins surged.

According to investor Dmitry Machihin, such messages are a private opinion of a person not affiliated with a digital asset, and therefore, legally, there is no grounds to fault Musk’s Twitter activity.

“These are decentralised assets; they are not securities in the sense of the U.S. Securities and Exchange Commission (SEC) and fall outside pump-and-dump regulation. For example, if Musk writes: “Sell Tesla shares, I am tired of all this” and after that the shares drop, where they are bought back, then Musk will be invited to the SEC the very next day,” he explained.

Grigory Klumov, founder of the stablecoin platform Stasis, agrees: “Everything that is not prohibited is permitted.”

The well-known trader Whale Panda suggested that Musk mentioned Dogecoin so often in his tweets because he could not write too much about Bitcoin — “this would get him into trouble.”

He couldn’t tweet about #Bitcoin too much because that would get him in trouble so instead @elonmusk was just tweeting about $DOGE which was code for Bitcoin pic.twitter.com/nPFCf42lxn

— WhalePanda (@WhalePanda) February 8, 2021

Lead RoboForex analyst Dmitry Gurkovsky notes that Musk’s access to a large audience can generate hype around a given asset, whether cryptocurrency, GameStop shares or the game-maker Cyberpunk 2077—CD Projekt. Typically, after a substantial rally these assets corrected toward their previous values.

“This situation is undoubtedly a “headache” for regulators, as they must assess whether a given message violates existing norms and whether it was published to gain personal profit. In 2018 the SEC fined Musk $20 million for his tweets and forced him to step down as chair of Tesla’s board. Probably not the last penalty for the entrepreneur for social-media posts,” Gurkovsky predicted.

Yuriy Brisov, a member of the Committee on Legal Support for the Digital Economy of the Moscow branch of the Association of Lawyers of Russia, argues that if Bitcoin participates in deals to obtain investment profits, such deals may fall under the securities and exchange law.

The expert did not rule out that the SEC could classify Musk’s tweets as broker activity without registration or as activities violating the securities offering and advertising laws.

“A violator could face a private suit if someone who followed his advice incurred losses. The suit could also be a class action, brought by several victims,” Brisov explained.

Representatives of the cryptocurrency community are convinced that Tesla’s investment in Bitcoin will draw new investments from large players into the industry.

Co-founder of Morgan Creek Digital Anthony Pompliano believes that corporates will now enter the market for sure.

The career risk for every CFO to buy Bitcoin on their balance sheet just disappeared.

Every corporation is going to do it.

— Pomp 🌪 (@APompliano) February 8, 2021

One of the founders of Winklevoss Capital and the Bitcoin exchange Gemini, Cameron Winklevoss, called Tesla’s investment in Bitcoin a farsighted move.

.@elonmusk and $TSLA adding $1.5B #Bitcoin to its balance sheet is both a visionary and responsible move. To the Mars!

— Cameron Winklevoss (@cameron) February 8, 2021

His brother Tyler noted that the company’s bitcoin investment proves that cash is “trash,” as Tesla opted to “swap them for hard money.”

Former head of the Office of the Controller of the Currency within the U.S. Treasury, Brian Brooks, stated that Tesla’s investment in Bitcoin is an “exciting development” for the crypto industry. For others, it is “a bit scary” news, as it signals the devaluation of world currencies.

“Bitcoin is potentially a far more stable store of value in the long run,” Brooks explained.

The potential adoption of Bitcoin as a payment method for Tesla products is undoubtedly a positive driver for the growth of the leading cryptocurrency, adds RoboForex’s lead analyst Dmitry Gurkovsky:

“Perhaps, following Tesla, other companies in the S&P 500 index will seriously consider such integration.”

Yuriy Mazur, head of the data analysis department at CEX.IO Broker, notes that the market’s rapid reaction and Bitcoin’s new all-time high once again underscore the potential of the leading cryptocurrency.

“Everything points to the uptrend continuing, and by February the asset’s price could rise to $50,000,” he forecasts.

Mazur’s nearest target is $48,051:

“It will be overcome quickly if a new wave of investment in Bitcoin from the corporate sector follows.”

Grigory Klumov, founder of the stablecoin platform Stasis, adds that a Bitcoin bubble could be discussed at $500,000–$1 million per coin.

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