- U.S. based crypto exchange executed purchase for Tesla’s bitcoin investment
- Coinbase enhancing its role as Corporate America deepens the reliance on crypto
Tesla’s Massive Crypto Investment Assisted by Coinbase
Coinbase, which is a U.S. based crypto exchange, has been assisting large firms towards investments in Bitcoins. Their prime brokerage arm includes more than five Fortune 500 companies as clients and is also preparing itself to go public in this calendar year.
As Tesla has acquired a niche for itself in the current market scenario and decisions taken by them are followed worldwide, their $1.5 billion bitcoin investment could prove to be a watershed moment in the crypto market. There is a strong word going on that Tesla is among Coinbase’s deep-pocket corporate clientele. This investment would guide diversification and maximise returns on cash that is not required to maintain adequate operating liquidity.
Similar to the execution of MicroStrategy’s purchase by Coinbase, this order of Tesla was also routed through several over-the-counter (OTC) trading desks. With the utilisation of Coinbase’s agency OTC desk and a suite of routing and algorithmic trading tools, MicroStrategy could acquire its desired position without incurring any market impact while overcoming the VWAP [Volume Weighted Average Price] in the process.
With the price of Bitcoins hovering around $50,000, many companies are inclined to consider portfolio diversification as an investment in the digital asset as a store of value.
Road Ahead for Other Companies
Rumours are floating that some other established companies could consider investment in bitcoins and expand their digital wallet services. Only time will say how will the performance stabilise in the long run.
The move by Tesla to keep some of its corporate reserves might be a signal that it anticipates cryptocurrency to emerge as another store of long term value along with Gold and Dollar. Firms are very cautious concerning their reserves since this is a critical source of fund and belong to the shareholders. Such a change is radical and would require confidence from most stakeholders, especially retail investors.
Hence, firms may consider investments in this route, but it needs to infuse confidence and perhaps take baby steps before going in complete swing.
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