Billionaire Bitcoin (BTC) investor Tim Draper also made an early investment in Tesla. Elon Musk, the company’s CEO and the world’s richest man responded by adding #Bitcoin to his Twitter resume and joining the joint ranks of Twitter CEO Jack Dorsey and Reddit, founder Alexis Ohanian.
Draper, who holds 30,000 Bitcoins, reportedly told Musk that he wanted to pay for Tesla’s network Cybertruck in bitcoins while promoting Bitcoin payment processors for his portfolio company OpenNode. He says:
“Hi Elon Musk, I would like to buy a Tesla cybertruck. Although I would rather keep my #bitcoin, you can accept #bitcoin through our Draper VC company OpenNode.”
Elon Musk Causes Rise in BTC price
On January 29, shortly after Elon Musk’s support for Bitcoin began spreading on social media, Bitcoin rose 14% in just 30 minutes. Many people speculate that Musk may have been the high net worth investor behind the massive accumulation of Bitcoin on Coinbase over the past week.
In the past few days, Coinbase’s premium has increased to around $200 compared to Binance. This usually indicates a lot of buying activity from US investors. Musk didn’t follow the pace of biological change, however, and the rally turned around overnight. Bitcoin rose from $33,000 to over $38,000 and then fell back to $33,000.
Due to Musk’s interest in Bitcoin and the positive market sentiment surrounding BTC, Draper may have tweeted about Musk. In a recent interview with CNBC, Draper said that he was buying more bitcoin. Draper also stated that he has no plans to sell BTC in the future, and he firmly believes that Bitcoin is “the currency of the future.” He says:
“I’m actually just buying more [Bitcoin]… I have no interest in ever selling my #Bitcoin for dollars. Why would I take the currency of the future and sell it for the currency of the past?”
Data on the chain shows that Draper isn’t the only company focused on long-term profits. In fact, “HODLing” activity has hit a record high, showing that Bitcoin investors intend to hold BTC for a long time.
Will Bitcoin be used as currency?
Bitcoin is increasingly viewed as a store of value and a safe haven replacement for gold. However, in the past few months, the correlation and anti-correlation between Bitcoin, Gold and stocks have been declining.
In addition to the sharp rise in prices, worries about inflation and the central bank’s high level of liquidity have aroused great interest among institutional and wealthy investors. Although the adoption of BTC has become more common, the question remains whether Bitcoin is used today as a currency and medium of exchange, like the US dollar.
The irony is that if there is a significant uptrend in Bitcoin, investors are less likely to sell or spend Bitcoin. Draper himself suggested that he could pay $40,000 for the “electronic truck” in US dollars instead of the “future currency”.
However, if Bitcoin prices stabilize at a sufficiently high price level in the future and experience lower volatility, BTC may become more attractive for daily payments.
At the same time, the Bitcoin blockchain network may not be able to be used effectively for daily first-tier payments as the network gains more users and needs to be expanded. At this point, second-tier expansion solutions like the Lightning Network and side-chains like Liquid can become blockchain “applications” that process micro-payments instantly. Such an interoperable platform can be weighed without trust, privacy and degree of dispersion.
