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Tesla’s bitcoin purchase brokered by Coinbase



Executed over several days in the first week of February this year in order to limit market slippage, Tesla made a $1.5 billion bitcoin purchase which has now been revealed by Block to have been brokered by the cryptocurrency platform, Coinbase. Up until this announcement it had been unclear who had facilitated the significant purchase, a mystery which had opened up the idea to a brand new set of mainstream institutional investors and corporates.

With a market capitalisation of $766 billion, Tesla’s investment into bitcoin as a reserve asset has begun to turn heads; the world’s largest producer of electric vehicles has poured nearly 8% of its cash into virtual currency, which, following Tesla’s announcement, increased the price of bitcoin by 20%. Upon investment, Tesla stated in its filing with the Securities Exchange Commission that they had invested in bitcoin to enable ‘more flexibility to further diversify and maximise returns on cash.

Leveraging the power of trading algorithms and human effort meant that Coinbase Prime – the exchange’s brokerage unit which facilitated the transaction – worked to slice Tesla’s order, minimising the price impact by cutting it into less significant orders and placing them across a number of liquidity pools.

Bitcoin

Not only has Coinbase facilitated major purchases from Tesla, but its agency OTC desk also acted as the primary execution partner for a multi-billion bitcoin investment throughout last year for business intelligence service, MicroStrategy. Instead of executing client trades on an exchange, the OTC agency unit earns its commission by completing client deals directly between 2 parties.

Coinbase now has more than 43 million accounts in over 100 countries thanks to bitcoin’s rising popularity, a number which has risen by 8 million since the middle of 2020. The San-Francisco-based establishment also revealed that last year saw a significant increase in its incoming capital, its $90 billion worth of assets within the platform a signifier of the unprecedented events which have led to the mainstream adoption of cryptocurrency.

Having rolled out its crypto trading desk back in 2018 and originally working to gauge interest in cryptocurrency from professional traders, Coinbase’s custody service now controls $20 billion worth of cryptocurrencies, of which $14 billion were accrued in less than just 6 months.


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Tesla’s bitcoin purchase brokered by Coinbase

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