Elon Musk: Bitcoin is 'less dumb' than holding cash

LaToya Harding
·3-min read
SpaceX owner and Tesla CEO Elon Musk (R) gestures as he arrives on the red carpet for the Axel Springer Awards ceremony, in Berlin, on December 1, 2020. (Photo by HANNIBAL HANSCHKE / POOL / AFP) (Photo by HANNIBAL HANSCHKE/POOL/AFP via Getty Images)
SpaceX owner and Tesla CEO Elon Musk (R) gestures as he arrives on the red carpet for the Axel Springer Awards ceremony, in Berlin, on December 1, 2020. Photo: HANNIBAL HANSCHKE/POOL/AFP via Getty Images

Tesla’s (TSLA) chief executive, Elon Musk, has said that investing in Bitcoin (BTC-USD) is a “less dumb form of liquidity than cash” after the electric carmarker bought $1.5bn (£1.07bn) of the cryptocurrency.

“To be clear, I am not an investor, I am an engineer,” he said on Twitter. "I don’t even own any publicly traded stock besides Tesla.”

He added: “However, when fiat currency has negative real interest, only a fool wouldn’t look elsewhere. Bitcoin is almost as bs as fiat money. The key word is “almost”.

Musk also defended Tesla’s move to invest by saying Bitcoin is “adventurous enough for an S&P 500 company.”

It came in response to a Bloomberg interview with Binance CEO Changpeng Zhao. Zhao said he was “surprised” Musk was “so gung-on Dogecoin,” noting that the billionaire bet on Bitcoin and not Dogecoin.

Earlier this month, Musk said that he expects Tesla to “begin accepting bitcoin as a form of payment for [its] products in the near future, subject to applicable laws and initially on a limited basis, which [it] may or may not liquidate upon receipt.”

The news sent the price Bitcoin soaring, which had previously been knocked by regulators criticising the purchase of cryptocurrencies.

It is currently more than 1% up on Friday at $52,160 a coin.

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Neil Wilson, chief market analyst for Markets.com, said: “The move “highlights the power that Elon Musk has in shaping price action and moving markets. He’s now putting his money (shareholders’) where his mouth is”.

Meanwhile, the price of dogecoin (DOGE-USD) has also surged in recent weeks after Musk began tweeting about it. The rise has coincided with a surge of populism in financial markets around the world.

Dogecoin hit a new all-time high this month, as celebrity attention including rapper Snoop Dogg continued to buoy up the price of the joke token.

The digital currency, which uses a Shiba Inu dog as its mascot, first started up as a joke in 2013 but has seen its market capitalisation pass $6bn.

Musk first tweeted just the word “Doge”, followed by “Dogecoin is the people’s crypto”, and “No highs, no lows, only Doge”. He also posted a Lion King meme of him holding up the dogecoin dog as if it were Simba.

He said at the time: "They are really just meant to be jokes, but you know Dogecoin was made as a joke to make fun of cryptocurrencies obviously, but fate loves irony and often as a friend of mine says that the most ironic outcome or I'd say the most entertaining outcome and the most ironic outcome would be that Dogecoin becomes the currency of earth in the future.”

Bitcoin started 2020 at around $7,000 per coin. Despite its rise in the last year, the cryptocurrency remains extremely volatile and experts continue to remain sceptical about using it as an investment.

However, a survey published last week showed almost two-thirds of UK investors intend to buy bitcoin in 2021 and well over half expect its value to increase to $60,000 (£43,000).

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