Last Week in Review: Tesla buys $1.5bn of BTC
It was another week of fun and frenzy in the crypto world, with bullish sentiment aplenty. PayPal released their first revenue report since they introduced crypto, there was a big crypto announcement from Visa, and CME launched Ethereum futures – not to mention Michael Saylor held his corporate crypto conference. Last but not least, breaking news from Tesla has seen the bitcoin price power through to a new all-time high past $47k. Much wow.
We’ve juiced all that ripe fruit into one glass so it’s easier for you to drink. Gulp it all at once, we dare you.
Tesla buys $1.5bn in bitcoin and plans to accept it as payment
Tesla has bought $1.5 billion worth of bitcoin, according to a filing with the SEC.
The company said it bought bitcoin for “more flexibility to further diversity and maximise our returns on cash”. In addition to the purchase, the electric car company headed by crypto-advocate Elon Musk, said it would also start accepting bitcoin payments in exchange for its products.
Since the announcement, the price of bitcoin has catapulted to a new all-time high of more than $47k at the time of writing.
It can’t really be said that the news came out of the blue, given Musk’s recent decision to put Bitcoin in his bio. There was also a Twitter exchange in December of last year between Musk and Michael Saylor that certainly hinted at the move:
If you want to do your shareholders a $100 billion favor, convert the $TSLA balance sheet from USD to #BTC. Other firms on the S&P 500 would follow your lead & in time it would grow to become a $1 trillion favor.
— Michael Saylor (@michael_saylor) December 20, 2020
Are such large transactions even possible?
— Elon Musk (@elonmusk) December 20, 2020
One can only assume Saylor shared his “crypto playbook” with him after all. Everyone wants to be like Mike.
PayPal’s Q4 transaction revenue jumps 11.8% since adding crypto
PayPal announced its first quarterly report since adding crypto and the numbers are jaw-dropping, gaining 16 million in net active accounts and increasing revenue by roughly 12% from Q3 to $5.7 billion.
What’s more, customers who purchased crypto through the platform have been logging into PayPal twice as much as they were before buying crypto.
PayPal CEO Dan Schulman said: “Our strategy here is to work with wallets and exchanges to enable users to purchase these currencies using their Visa credentials or to cash out onto our Visa credential to make a fiat purchase at any of the 70 million merchants where Visa is accepted globally.” He also said the company has been working with regulators and central banks to shape the “next generation of the financial system.”
Interestingly, James Friedman, a senior fintech analyst at Susquehanna Financial Group, said PayPal’s network of merchants may be more valuable than the trading services it can offer. He noted that crypto trading for other companies like Square has not been “that profitable”.
“Basically, Square offers crypto as a service and they make the market but they don’t really mark it up,” Friedman said. “Trading is interesting but it’s not nearly as interesting to us as a payments acceptance device … [PayPal has] incredible merchant volume.”
In a survey from Susquehanna in December, more than 70% of respondents said they would accept bitcoin for payment at checkout if Paypal or Square enabled it.
Visa reveals bitcoin and crypto roadmap
Credit card behemoth Visa has formally announced that it plans to help banks roll out bitcoin and crypto buying and trading services with a Visa crypto software program, which is set to launch later this year.
First Boulevard, a Kansas-based digital bank, will pilot APIs designed to help Visa bank clients integrate bitcoin and other cryptocurrencies. Bitcoin and crypto custodian Anchorage – which last month became the first national US “digital asset bank” – will hold the crypto on behalf of Visa clients. Banks will then be able to let their users withdraw and self-custody their cryptocurrencies.
Visa chief exec Al Kelly explained the company’s strategy at the their fiscal first-quarter 2021: “Our strategy here is to work with wallets and exchanges to enable users to purchase these currencies using their Visa credentials or to cash out onto our Visa credential to make a fiat purchase at any of the 70 million merchants where Visa is accepted globally.”
Michael Saylor and MicroStrategy’s playbook for corporate bitcoin adoption
MicroStrategy CEO (and self-appointed Bitcoin salesman) Michael Saylor held his long-awaited virtual WORLD.NOW bitcoin-themed conference last Wednesday, where he encouraged fellow business executives to jump aboard the bitcoin train in order to avoid financial “serfdom”.
Saylor detailed the crypto playbook that catapulted his 30-year-old firm to new heights in less than a year. In his solo address, he focused on practical business strategies and procedures that he believes will spark a monetary revolution should more corporations get on board.
MicroStrategy was the first US corporation to invest its dollarised treasury in bitcoin and is currently sitting on a 71,079 BTC reserve. Determined they won’t be the last, a team of accountants, lawyers and company execs joined in the effort to educate other corporate execs around the practicalities of bitcoin accumulation.
Saylor said: “Every company has to make one of two choices when faced with a world of belligerent money printing”. He continued, “You either have to decapitalize, which is kind of like self destruct … or you have to recapitalize with an asset which is going to appreciate faster than the rate of monetary supply expansion. This is where bitcoin comes in.”
Saylor also offered a playbook to companies approaching BTC as a business, saying firms could start by developing bitcoin tools, developing software, or providing bitcoin infrastructure, to name a few.
Saylor concluded: “We’re at the beginning of a very very long trend here. And so, with that, I have more stuff to say, I don’t have time to say it, but, you know, follow me on Twitter, and stay tuned.”
Pro-bitcoiner Cynthia Lummis assigned to Senate Banking Committee
The Senate has assigned pro-bitcoin senator Cynthia Lummis to the Banking, Housing and Urban Affairs Committee.
Marking a major win for the crypto community, Lummis detailed her intention to educate fellow senators on the technology: “Through my role on the Banking Committee, I hope to shine a light on many of these pioneering efforts and work with federal regulators to ensure that regulation of digital assets are structured to encourage innovation, instead of stifling it,” she said about her appointment. “I also look forward to providing regulatory relief to our community banks and ensuring that we have vibrant, safe financial markets.”
Appearing on Anthony Pompliano’s podcast last week, Lummis announced plans to form a financial innovation caucus in the Senate to promote a “proper understanding and responsible regulation of things like digital assets and emerging financial technologies.”
She also called bitcoin a better store of value for consumers and labelled it a potential hedge against the dollar. Excitingly, Lummis is the first sitting senator to (publically) hold the asset.
The caucus hopes to counter arguments that cryptocurrencies are primarily a money-laundering tool in order to highlight opportunities for innovation in the US. She told the Pomp Podcast that she’d already had a call with Treasury Secretary Janet Yellen and said she believes the Treasury Secretary has an open mind around digital assets – which in line with Yellen’s comments about crypto in her written testimony for her Senate confirmation.
CME launches Ethereum futures
The Chicago Mercantile Exchange (CME) launched Ethereum futures trading on its platform today.
A total of 77 Ethereum futures contracts have already been traded since the launch. Per the CME’s specifications, the contracts are for 50 ETH each (~$83187,50 each).
CME ether futures start trading. 77 contracts crossed so far. ETH / BTC retraced a bit. pic.twitter.com/YaFwtV4Jir
— Documenting Ethereum ? (@DocumentEther) February 8, 2021
As a type of derivatives contract, futures are designed for selling a specific asset at a specific price on a certain date in the future. Check out our blog to learn more about futures and how they work.
CME launched Bitcoin futures and options trading just over three years ago. Back then though, smart contracts technology was still in its infancy. Today, Ethereum is a “global financial powerhouse” as Komodo CTO Kadan Stadelmann put it, citing that decentralised exchanges, lending protocols and NFT marketplaces all currently run on the Ethereum network.
Stadelmann added: “Bitcoin and Ethereum are obviously in a different stratosphere when looking at current crypto adoption, but I do believe this is only the beginning of futures trading expansion among large institutions. We will see more assets supported and more players in the mix.”