Tesla CEO and billionaire Elon Musk said on Feb. 20 that the price of bitcoin and ethereum seemed high. This comment came at a time when the cryptocurrencies have hit very high recorded as bitcoin is now priced at $1 trillion in market-capitalization threshold.
Musk on bitcoin and ethereum
Musk, whose recent tweets have sparked a debate about cryptocurrency, make the comment on his official Twitter account while replying to a user who said that gold was better than both cryptocurrency and cash.
That said, BTC & ETH do seem high lol
— Elon Musk (@elonmusk) February 20, 2021
The Tesla and SpaceX CEO said in a tweet that money is just data that allows people to avoid the inconvenience of barter and that bitcoin and ethereum do seem high. Earlier in the week, Musk remarked that he found the prospect of holding bitcoin adventurous for an S&P 500 company.
Bitcoin is the most popular cryptocurrency in the world, and as of Feb. 20 it has hit a new high in Asia trading and extended a two-month rally a day after the digital currency's market capitalization recorded more than $1 trillion.
Meanwhile, Ethereum or ether, is the second-largest cryptocurrency by daily volume and market capitalization. Musk is very expressive about his opinion of digital currencies and defended Tesla's purchase of $1.5 billion of bitcoin, which has started the mainstream interest in the cryptocurrency.
Elon Musk on bitcoin purchase
Musk stated that the inability to get a return on Tesla's cash was behind the decision to purchase $1.5 billion of bitcoin. Musk posted on Twitter on Feb. 18 that when flat currency has negative real interest, only a fool wouldn't look elsewhere.
The real interest rates are negative when the rate of inflation exceeds the nominal interest rate. However, the real yields have been moving higher in recent weeks as the investors fear the unprecedented amount of monetary stimulus and fiscal stimulus will bring back inflation.
The real yield, which lasted 10 years, was -0.8% on Feb. 19 while the real yield that lasted 30 years was positive, according to Fox Business.
Earlier this month, Tesla has announced that they bought $1.5 billion of bitcoin in their effort to diversify and to maximize the return on its cash.
The company has ended 2020 with $19.38 billion in cash and in cash equivalents, according to an SEC filling. It also noted that it may soon accept bitcoin aside from cash payment when purchasing cars.
Tesla stated that it may invest more of its cash in digital assets, in gold bullion and in gold exchange-traded funds and in other assets. The Fed has stated that interest rates will still be low through the end of 2023.
Musk's decision to add bitcoin to the balance sheet of Tesla followed an exchange that he had with Michael Saylor, the CEO of MicroStrategy, who announced that his company had accumulated $1.3 billion worth of cryptocurrency back in December.
This week, MicroStrategy announced that it plans to raise $900 million through a convertible debt sale, stating that it would use the proceeds to purchase more bitcoin. Musk added that bitcoin is almost as "BS" as fiat money.
This article is owned by Tech Times
Written by Sieeka Khan
