The other day, strange news came: Tesla’s company Elon Musk bought bitcoins for $ 1.5 billion. It’s strange because Tesla is not a hedge fund, but a manufacturer of electric cars.
The situation becomes quite delicate when we remember that Bitcoin and Tesla are in a huge price bubble at the time of the news. It turns out that one “bubble” is embedded in another.
Let’s see what happened
In general, large companies with big money (like Apple and Google) have investment portfolios. But the purpose of such a portfolio is usually to keep money from inflation until the business needs it.
I doubt very much that Tesla bought Bitcoin to hedge against inflation, because the risks of its collapse are too high.
First, Musk could make money himself by unofficially buying the cue ball before Tesla bought it (it was clear that the price would jump right away).
Secondly, Tesla rightly believed that the announcement of such a large deal would spur prices and inflate the current Bitcoin bubble even more.
Most likely, Tesla staked on the “Elon effect”: investors invest in the company after Elon Musk recommends it on Twitter.
The Elon Effect
Here are the funniest news from this series:
- In January 2020, after Musk’s advice to use the Signal messenger, investors confused it with a small company Signal Advance and raised its shares by 1,100% – from 60 cents to $ 7.19.
- After Elon Musk answered live questions from users of the Clubhouse audio social network on February 1, investors wanted to buy shares in the service, but got mixed up and invested in Clubhouse Media Group and raised its shares by 100%.
Complete madness, but you can make money on this madness.
I think the plan looks something like this:
- Buying $ 1.5 billion worth of bitcoins will drive up prices.
- Announce it in the press, accompany with approving comments and tweets from Musk.
- The press will spin and savor this news.
- People “will follow Elon”, thinking something like “Well, since Musk has invested, then I should too – Musk is not a fool”.
- It remains to get out of this “bubble” carefully and in time, fixing the profit and leaving the others to wait for the collapse.
I don’t think Musk purposefully wants to deprive people of money or does it for profit. Rather, he just needs money for Tesla (maybe for himself at the same time), he sees the opportunity and uses it.
Everything is for survival. CEOs of public companies are always afraid of a fall in their value, and the extra $ 200-300 million will help a lot due to the fact that Tesla cannot start making good money.
The catch for buyers is that when they buy Bitcoin after Musk, they play his game and take the bloated asset.
Perhaps Tesla has already begun to slowly sell bitcoin and will get rid of it in a month. None of the buyers will know about this, or will know when it’s too late.
I would like to remind you that you must also act in your own interest. To think independently, not to be naive and not to become a victim of manipulation – even of such brilliant and creative people as Elon Musk.
Well, in general, do not speculate, but it is normal to invest according to a passive strategy.
Musk describes himself as a bitcoin proponent, but that did not stop him from posting a series of tweets about dogecoin. Its price immediately skyrocketed by 50%. Some say that Musk decided to invest in bitcoin, because it is more profitable, but you can look at doge to btc chart and make your own conclusions.