ELON MUSK AND TESLA - the blessing of a threat for BITCOIN and crypto space?
INTRODUCTION
Less than 3 weeks ago, I posted an article called "ELON MUSK AND BITCOIN - isn't it worrying to see how one person can influence an entire industry with a single tweet?".
This particular publication attracted quite a number of interesting and valuable comments, and reading them only strengthened my belief that most people out there see ELON MUSK as a blessing for cryptocurrencies. They see him as a successful entrepreneur with an enormous reach (almost 48million followers on Twitter alone) who is bringing more attention and trust towards bitcoin and crypto space in general.
I've read so many publications praising him and his work. And somehow I cannot stop being concerned about the fact that decentralized assets (crypto) are relying so heavily on one entity. After all, Tesla and Elon Musk are considered as "one".
Today I would like to share some of those concerns with you, dear readers. And I would like to find out how many of you see things the way I do.
MAIN PROBLEM - TESLA
Only several days ago, the price of BITCOIN increased rapidly after news that TESLA bought 1.5$ billion worth of bitcoin. They want to store it as their reserve funds and hedge against inflation, which is definitely a great idea. One that many other corporations will hopefully follow sooner than later.
This news sounds brilliant and it created an enormous wave of optimism within the crypto space. Markets reacted very well and BITCOIN recently went above 50k USD (new all-time high).
So what's the problem - you may ask?
Well. Let's put it straight: what will happen if Tesla would for some reason start doing poorly? And there are so many reasons for them to get in trouble. PE ratio (price to earnings) indication is at INSANE LEVELS and it's hard to disagree with those who claim that TESLA is overvalued.
My strong impression is that currently, TESLA is one of the largest bubbles out there. And I'm concerned that this bubble will burst.
It's hard to predict what would happen in such a scenario. My fair assumption is that they would decide to sell off a large part of those BTC (especially since they made huge profits already) to ensure buy-backs to their own stocks. After all, TESLA will most likely do their best to avoid their own stocks from crashing down.
So in a way, we're witnessing the growth of the biggest bubble. The company which doesn't really deliver much. With market cap out of this world. With stocks so high mostly because of one person (Elon Musk), who knows how to attract investors and believers.
I see so many red flags and I wonder how many of you see them too.
BOTTOM LINE
My goal is not to spread fear. I surely like to hear opinions coming from my readers.
However, mainly the reason behind this publication is to point out that all of us (who invested in crypto) should pay close attention to the situation around Tesla. Because so much depends on it. And being able to foresee any potential risk of Tesla getting into any sort of trouble (which could result in their stock prices plummeting) can be a great indicator of upcoming bitcoin price action.
RESTEEM and SHARE YOUR VIEW
I would obviously appreciate every single resteem. And mostly I would be glad to read some interesting and valuable comments. So please, share your thoughts with me and rest reassured, that I check your comment. I read them all :)
Yours, @crypto.piotr
@project.hope founder
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Hello
You raise a very good point and a very reasonable concern. I think that the propping up of high valuations will likely continue, and hopefully when the Tesla bubble bursts, there will be so many other companies involved, that if he sells his Bitcoin it will be bought quickly by stronger hands.
Thanks for your comment @shortsegments
I found it interesting that just few days after this post, shares of Tesla on stock market crashed down rapidly and BTC crashed as well at the very same moment.
It's hard not to see huge corelation between those two. Wouldn't you agree?
ps. you may also find my recent post interesting :).
Cheers, Piotr
You might be right about the scenario you portray, but the truth is, lots of other businesses have also bought Bitcoin with lots of money, and most likely... they will still keep on buying, and new companies buying.
But, there is one threat, and that is if Tesla would start to sell off, and if later Elon Musk would start to tweet about it. One tweet from Elon saying that he doesn't trust Bitocin anymore, or that it is overvalued, and I am sure we will see a market drop in price for Bitcoin around 20% at once. And if it comes as a wave, it will ripple the prices even more.
But, that is part of the fun and the beauty of the game... :)
hi @unbiasedwriter
Thanks for sharing your thoughts with me.
You've mentioned that " lots of other businesses have also bought Bitcoin with lots of money". The think is that I cannot come up with even one company name which would buy as much as Tesla did. Even Microstrategy didn't get that much.
That would make Tesla the biggest BTC holder I know about. Apparently they purchased most of their Bitcoin around price of 30-31k. That would be around 48-50 thousands of BTC. If for any reason they would be forced to sell off even small part of it (to ensure their stock market price stability in case of their stock price bubble popping out) then we could see quite a solid price drop.
But the most important and devastating would be publicity around it. In my opinion, if Tesla stock market would burst then we shall be prepared for price of bitcoin to crash soon after. And for that reason Tesla matters more than any other "silent" "whale investor".
Wouldn't you agree on tha?
Cheers, Piotr
Of course, Tesla matters a lot, and so do the words of Elon Musk! But, I believe the market is also capable of keeping up without him, and if the market would collapse because of eventual action from Elon Musk/Tesla, then I would call it a healthy collapse :)
Thanks for your comment @unbiasedwriter
I found it interesting that just few days after this post, shares of Tesla on stock market crashed down rapidly and BTC crashed as well at the very same moment.
It's hard not to see huge corelation between those two. Wouldn't you agree?
ps. you may also find my recent post interesting :).
Cheers, Piotr
Of course, often we see red days across the entire market correlate, but of course, Bitcoin and Tesla are closer related now than just a Netflix or an Apple stock... Also, your recent post was interesting, will try to check out the video as well soon! :)
Hi @crypto.piotr
It's hard not to feel concerned knowing that the decentralization that we've always been proud of is now pegged with only one entity.
However, I still think that Bitcoin is far bigger than Tesla or any other company. Even if Tesla faces difficulties in the future, this will probably affect Bitcoin in the short term only. But in the long term (and this is what I really care about), I believe that Bitcoin will continue to survive and thrive.
Thank you for sharing :))
It is my concern too, since the tesla is a bubble at the moment, on the other hand, whoever bet against it lost 40 billion dollars just last year.
However, I believe that if Tesla goes bust, nothing will happen, bitcoin is bitcoin a coin made to be used, and no reserve of value as they are currently doing.
Perhaps we are worrying for nothing.
Elon musk revolutionised the tech field and thriving innovations borned from his contribution. We see electric car company getting tremendous attention from developed billionaires .They are also trying to democratise their cars all around the hemisphere to raise popularity and acceptance in global market.Starting from North America to heart of Asian economic hotspot ,indo pacific region ,far east zone and EU market capture are the preferences. Undoubtedly, its a increasing company having larger potential in stock market more likely to produce creditable interest in Btc market ..that is predictable by learning from the following excerpt. ...
I firmly believe that these are manipulations on the part of this great bubble that, as you say, is being created.And I am very convinced that within 7 days from today (next Sunday), the price of bitcoin will fall due to some movement of this big bubble. I am not an expert in the field but my intuition tells me that the movement is going towards that place. Even several friends who are in the world of trading think the same as me.
And I have the opinion that it does not seem healthy to me that the price of a cryptocurrency is centralized, and clearly that is what is happening.
Very good your reflections and I only hope that people are more rational and realize this.
Thanks for your comment @reinaldoverdu
I feel very same way.
I found it interesting that just few days after this post, shares of Tesla on stock market crashed down rapidly and BTC crashed as well at the very same moment.
It's hard not to see huge corelation between those two. Wouldn't you agree?
ps. you may also find my recent post interesting :).
Cheers, Piotr
Good morning @ crypto.piotr
A very interesting article, especially for those of us who follow the rise and fall of cryptocurrencies with difficulty.
The importance of Elon Musk's opinion needs to be followed, but I perceive it as a risk and remember a maxim about prudence for investors: do not invest everything in the same object
Buen día @crypto.piotr
Un artículo muy interesante, especialmente para quienes seguimos conn dificultad el sube y baja de las cryptomonedas.
La importancia de la opinión de Elon Musk es necesario seguirla, pero la percibo como un riesgo y recuerdo una máxima sobre la prudencia para inversores: no invertir todo en el mismo objeto
Hi @crypto.piotr – very well laid out here. I share your concern but not with Tesla. At the end of the day Tesla is a real company with a real product that you can buy. It will thrive or not based on the ingenuity they continue to propel via their vehicles and their other product lines. We will learn more about their viability as the subsidies for EV's dies down. Observationally I've seen more Tesla's on the road this week than I can remember at one time. Bodes well for their continued success. Their stake in BTC is a small piece of their available cash.
I do however worry about companies that have taken a huge stake in BTC with very large sums of their available cash. Taking such a large position with a speculative asset is as dangerous for a company as it is for an individual. The difference being an individual is not responsible to shareholders. This increases the volatility ten-fold thus increasing the risk to faulty decision-making. This volatility could lead to a burst of the "bubble" in cryptos because of the need for the cash by the company.
Dear @tsharpaphi
I appreciate you dropping by and sharing your thoughts with me on this particular subject.
It is real company, but without real product. And definetly without much profits coming from their sale. I personally consider Tesla one of the biggest bubble out there.
I wasn't aware of that. Are you sure that TESLA is "sitting" on pile of FIAT currency?
ps.
I found it interesting that just few days after this post, shares of Tesla on stock market crashed down rapidly and BTC crashed as well at the very same moment.
It's hard not to see huge corelation between those two. Wouldn't you agree?
ps. you may also find my recent post interesting :).
Cheers, Piotr
This headline is from The NY Times 27JAN2021: "Tesla Has First Profitable Year, but Competition Is Growing". In the article: "The company reported revenue of $10.7 billion in the fourth quarter, up 45.5 percent from the year-ago period. Its' full year revenue climbed to $31.5 billion, up from $24.6 billion in 2019."
Their BTC stake is just under 8% of their cash. They have been profitable now for about 5 quarters in a row. Will it be sustainable as the subsidies melt away? That is the question that we will have to wait and see.
Tesla fell along with the rest of the market. Technology stocks have taken a beating the past few days in the US market.
thanks for being so responsive @tsharpaphi
I just made a post now, I did understand how to do it before.
https://steemit.com/hive-175254/@cryptocheta/some-swedish-regulators-warn-consumers-against-cryptocurrency-as-market-begins-to-tumble-new
I also enjoyed your post too
Hi @crypto.piotr - Sorry for my late reply, I nearly missed your post (well you did leave me off your CC list ;) )
I understand your argument and there is of course a big risk that Tesla could soon dump their Bitcoin and we could have a big dump in price as a result. However, I have a few points that may balance the argument slightly.
First, Elon Musk obviously believes in crypto and he understands the technology and the markets. He knows the effect he can have so is unlikely to drop $1.5tn on to exchange in one hit. Actually, he is more likely to do a private exchange. As such, it is the news that has more impact than the trade. Will we ever know when he sells? He may have sold some already - he would have taken a handsome profit.
Secondly, market volumes are relatively high. $1.5t isn't as big as it would have been. Daily volumes can touch that anyway.
Thirdly, it is not just Tesla but other big companies are getting into cyrpto in a big way. I think the Visa and Mastercard news is almost even bigger as it shows that cyrpto is no longer a niche market for a bunch of geeks (and yes, Elon is a geek) but it now starts becoming mainstream. We need mainstream to not only push the price up but also to eventually stabilise the price.
BIG THX for your amazing comment @awah
I'm not sure if you understood my point. What if TESLA bubble would burst. Obviously for TESLA their own shares (assets) are the most important. So they would do anything to limit that damage. And I would expect them selling off part of their BTC (reserves) to carry on with buy-backs.
So it doesn't matter much if Elon/Tesla do understand technology. It's all about protecting what has biggest value. And for TESLA their stock market price matters a lot.
Either way, I wanted to bring some attention towards it as I consider it important to understand strong relation between BTC and Tesla. Something we didn't have to worry about in the past.
Imagine FUD and wave of panic if mass media would bombard everyone with information, that TESLA is selling their BTC to rescue their own stocks. And this is real possible scenario.
ps.
I found it interesting that just few days after this post, shares of Tesla on stock market crashed down rapidly and BTC crashed as well at the very same moment.
It's hard not to see huge corelation between those two. Wouldn't you agree?
ps. you may also find my recent post interesting :).
Cheers, Piotr