Elon Musk’s Tesla bought Bitcoin
The obsession of Elon Musk with cryptography has now been brought to its logical conclusion. As disconcerting as it is unavoidable, it is.
Bitcoin extended gains on Tuesday to a record high as the afterglow of Tesla Inc’s investment in the cryptocurrency had investors reckoning it would become a mainstream asset class for both corporates and money managers.
Tesla boss Elon Musk has long been a cryptocurrency fan – he has talked them up online – but Tesla’s hard currency investment came as a surprise that has put a rocket under the sector
Tesla’s explanation for the move is relatively straightforward: “To further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.”
Bitcoin is already up 62% this year, on top of a 300% rally last year, as investors search for alternatives to the greenback because of the U.S. Federal Reserve’s 0% interest rates.Tesla is speculating with $1.5 billion of the roughly $19 billion it had on the balance sheet at the end of December, $12 billion of which was raised from selling more equity into last year’s frenzied rally.
Additionally, Chinese are expected to send billions of yuan to each other during the weeklong holiday via chat apps like WeChat – digital versions of traditional ‘red packet’ envelopes filled with cash.