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Tesla's Bitcoin investments and Elon Musk are irresponsible


Elon Musk has something of King Midas. However, the Goldfinger from the Greek legend did not drive his fellow men into half-baked investments via Twitter. That is exactly what Musk does - with sadistic pleasure.

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Tesla boss Elon Musk as a Bitcoin investor: Tesla hype and Bitcoin hype become one


Everything Elon Musk touches - whether Tesla or Space-X - turns to gold when he touches it.

His astonishing success with Tesla has already made Musk the richest person on the planet.

Now Musk is preparing to speculate on a large scale with Bitcoin - the currency that has reached new heights with the flood of money from the world's central banks.

For Musk, his Bitcoin investment could turn to gold, but for many others, the story could turn out badly again.

In the short term, a Bitcoin gold finger is a nice thing.

After Musk announced the investment in the cryptocurrency on Monday, the Tesla price climbed by two percent.

The market value rose by more than ten times the 1.5 billion dollars that Tesla invested in Bitcoin in January.

Twitter opinion leaders like Anthony Pompleano had been writing about Tesla investing in Bitcoin since early January.

In doing so, they fueled the rise in the price of Bitcoin - and Tesla.

Since the beginning of the year, the market value of the electric car manufacturer has shot up by almost a quarter, to more than $ 800 billion.

For stock market historians: In the fall of 2019, a Tesla share (adjusted for the share split that has taken place since then) cost less than $ 50, and not a good $ 850 as last.

Tesla and Bitcoin: united in the hype

Now Musk ignites the next stage.

We are approaching what is now called "The Singularity" by jokers in Silicon Valley: The point in time when the Tesla hype and the Bitcoin hype become one.

With the crypto purchase, Musk procures more fuel for his Tesla rocket.

The move should attract more investors into the share, predicted the analysts at Wedbush, who have announced a price target of $ 950 plus a "bull case" (or better: Bitcoin case) of $ 1250.

Musk has turned on the electromagnet for all investors who believe in rising Bitcoin prices: There are quite a few of them on Robinhood and Reddit.

For Musk's Tesla shares and thus for his private fortune, "HODL" - the Kypto code word for "buy and hold" - is a brilliant command.

At the same time, it is an irresponsible maneuver that shows once again how indifferent the great visionary is to such boring things as stock exchange rules or private investors.

Musk doesn't care about private investors - he delights in Dogecoin

A comparison with investor legend Warren Buffett illustrates what the problem is.

For decades he has also used the effect that his investment attracts other investors.

It is not uncommon for him to pay dearly when he lends his reputation, as with the 10 percent guaranteed dividend financing for the investment bank Goldman Sachs at the height of the financial crisis twelve years ago.

Unlike Musk, Buffett has long sought to encourage private investors to invest in a meaningful and successful style.

Musk, on the other hand, recently tweeted about the cryptocurrency satire Dogecoin at around 2 a.m. Californian time, causing its price to explode.

The richest person in the world, who undoubtedly has great merits as an engineer, has apparently still not understood that he is responsible for what he says.

Mainly because it can drive less well-informed people into disaster (i.e. in Dogecoin).

In addition, the Tesla boss is now threatened with trouble with the US Securities and Exchange Commission.

After all, Musk is a serial tweeter and had to give up part of his official title at Tesla after a few stock market-relevant and sometimes factually false tweets.

Now he uses Twitter intensively to push his own investments even higher with Bitcoin: Tesla is innocently issuing its crypto investments as supplementary financial investments, but it's not that simple.

Bitcoin is "too big to fail" - a ban will hardly be possible anymore

The hype about Bitcoin "puts everything that has gone before in the shade," wrote asset manager Jens Ehrhardt from DJE Kapital back in January.

The euphoria shows what flowers the ultra-loose monetary policy and the growing greed of investors with the rally can drive.

The delusion creates its own reality.

Four or five years ago, even the level-headed crypto friends would not have been very surprised if their Bitcoins had turned into worthless electronic waste within a short time.

Today, however, Bitcoin is already so big that the cryptocurrency can no longer simply disappear.

With the Musk Midas price jump by 14 percent at times to $ 43,000, the market capitalization of Bitcoin exceeded the $ 800 billion mark.

With the other 3,000 cryptocurrencies, more than 1,000 billion dollars come together.

That is more than a fifth of the 4,000 to 5,000 billion dollars that is worth all gold that is available for investment worldwide.

"The market for cyber currencies has reached a size that makes a ban no longer possible", judges asset manager Ehrhardt.

A state ban - or a sharp drop in prices for other reasons - would shake the financial markets, the wealth of investors and ultimately the private sector.

The central banks are therefore in the absurd situation of having to support paper money enemies with their alternative currencies if they do not want to risk a crash on the financial markets.

Irresponsible jokes

Tesla and Bitcoin show everyone what upheavals the bailout policy of the central banks has already created.

Nobody knows whether this unprecedented experiment will be successful in the long term or whether people will one day lose confidence in these policies and in the stability of their currencies, as Elliott Management's hedge fund manager Paul Singer recently warned.

This is a difficult environment for long-term investors.

If the richest person in the world takes stock market rules lightly and uses his Twitter account to drive investors into over-hyped fun investments, the next crash is inevitable.

By the way, the old King Midas almost starved and thirsted because food and drinks he touched turned into gold.

Only the grace of the god Dionysus saved him, who told him how to get rid of his cursed gift.

Source: spiegel

All news articles on 2021-02-08

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