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New bitcoin record triggers fear of Elon Musk-fueled bubble

2021-02-09T14:10:31.506Z


The price of the cryptocurrency has reached over 40,000 euros after the announcement that Tesla has invested in it


A week ago, a rocket from SpaceX, Elon Musk's aerospace company, exploded on landing after a test flight.

“We had an excellent flight again.

We just have to do a little work on the landing, ”a spokesperson commented.

The phrase perfectly illustrates the current moment of bitcoin: a perfect flight, a landing full of uncertainties.

The cryptocurrency continues its climb to the skies on Tuesday driven by the decision of the electric car manufacturer Tesla, the company founded and directed by Musk, to invest in it 1.25 billion euros and accept payments in bitcoins to acquire its vehicles "in the future next".

Its price has reached more than 48,000 dollars (39,600 euros), a record high, with a revaluation of more than 300% in one year.

The voices calling for a regulation of cryptocurrency operations have re-emerged after Tesla's decision, which legitimizes the use of an asset considered by the European Central Bank "highly speculative."

Precisely one of the supervisor's key men in recent years, former Vice President Vitor Constancio, has been one of the most blunt in censoring passivity in the face of the uncontrolled rise of bitcoin.

“The authorities tolerate the public being misled by tech buffs who have no idea what money is.

As Keynes proved, the main role of money is to be a stable unit of account defined and managed by the state that creates liquidity.

The bitcoin is just a series of zeros and ones in a computer network, it has no fundamental value because it will never be a currency, "he criticized on the social network Twitter.

Tesla just announced that it had bought 1.5 billion dollars of bitcoin and could in the future sell cars in bitcoins.

Since this morning both Bitcoin and Tesla are going up in the market.

Maybe there is afterall something in the saying that “Bitcoin is Tesla without the cars” 1/20

- Vitor Constâncio (@VMRConstancio) February 8, 2021

The messaging platform is the preferred setting for Elon Musk, the richest man in the world, to pitch to his more than 46 million followers clues about his future investments.

If Donald Trump was able to start trade wars with a tweet, Musk is not far behind: in recent weeks he has multiplied the price of Dogecoin, a cryptocurrency whose icon is a popular meme of a dog, has given wings to GameStop by sharing the link to the Reddit forum that was organized to artificially raise its price and thus damage bear funds, and has made bitcoin skyrocket just by writing its seven letters in its biography of the social network.

In a twist that surprised his followers, last week he announced that he was leaving Twitter for a while, without giving further explanation.

The rest was not such.

And two days later he was back to his frenetic pace of activity, sharing news of his company's rocket ships, memes and investment recommendations in short, joking messages.

His game with the markets is applauded by millions of people who flatter him as a visionary, a modern Midas king oblivious to boundaries, who doesn't mind showing up smoking marijuana and drinking whiskey live on a radio show.

Able to unseat Jeff Bezos himself from the throne of global wealth and obsessed with changing the world.

"I really like video games, but even if I had created great games, what effect would that have had on the world?" Says Ashlee Vance's biography of Musk.

Constancio, retired from his job as

number two

of the ECB, but very attentive to the news, even hints at possible manipulation.

Tesla has not disclosed when it made the bitcoin purchase, and Musk spent the month of December writing tweets in support of the cryptocurrency.

Did you warm up in value after you made the purchase to appreciate your firm's investment?

Tesla said it will use some of its leftover cash to buy bitcoins to maximize its money while diversifying its portfolio.

The former Portuguese banker questions this operation: "No company could manage a budget or make financial planning based on a unit that can vary so much," he says.

MicroStrategy

software

company

is one that has taken that risk.

He started using his cash to buy bitcoins in August, and now, after the earthquake of Tesla's announcement, he has more than 3 billion dollars (2.4 billion euros) in the cryptocurrency, almost triple what he invested.

However, the high volatility makes analysts skeptical of a possible massive entry of large companies following the example of Tesla.

The company's bet on bitcoin links two assets on which doubts hang.

The market capitalization of the car manufacturer exceeds 800,000 million dollars (661,000 million euros), something that led it to exceed the value of the other nine largest companies in the sector in the world together in December, despite the fact that their sales are much lower .

Tesla shares have a PER (the number of times that the profit is contained in the share price) greater than a thousand, while Apple's is 37, and the average of the Standard & Poors index firms, 23. That implies that Tesla will have to exponentially increase its sales to justify that price, for some analysts overvalued.

"Bitcoin is Tesla without cars," says a saying that circulates in the market.

Javier Molina, eToro spokesman in Spain, believes that the high optimism over Tesla's move may catapult bitcoin to $ 50,000 (41,000 euros).

Some institutional investors have jumped on the wave in recent months, but where some see a store of value supported by the limited number of bitcoins available, Constancio, who shared his ECB years with Mario Draghi, sees only smoke.

“Speculative assets are valued solely on beliefs.

Investors believe that, due to some risk, there will be more or fewer future buyers, and they buy or sell according to that expectation. "

In the midst of the maelstrom, some small investors are trying to profit from the

boom

, even though the risk of relapse is there.

When asked by one of them about where to start in the world of cryptocurrencies, the advice of another more veteran is indicative of the times in the market.

"As crazy as everything is, buy bitcoin and follow Elon Musk's Twitter account."


Source: elparis

All business articles on 2021-02-09

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