Elon Musk explain tesla buying of Bitcoin:
Tesla Inc. CEO Elon Musk said the lack to receive a return on his company’s cash was behind the choice to shop for $1.5 billion of bitcoin.
“When fiat currency has negative real interest, only a fool wouldn’t look elsewhere,” Musk tweeted on Thursday evening.
Real rate of interest s are negative when the speed of inflation exceeds the nominal interest rate. Real yields, however, are moving higher in recent weeks as investors fear the unprecedented amount of fiscal and monetary stimulus will bring back inflation. The 10-year real yield was around -0.8% on Friday while the 30-year real yield turned positive.
TESLA BUYS $1.5B IN BITCOIN, WILL START ACCEPTING FOR CARS
Tesla earlier this month announced the acquisition of $1.5 billion of bitcoin in an attempt to “further diversify and maximize” the return on its cash. Tesla ended 2020 with $19.38 billion in cash and cash equivalents, as noted in an SEC filing. It also noted it's going to soon accept bitcoin as payment for its cars.
Tesla said it's going to invest more of its take advantage digital assets, gold bullion, gold exchange-traded funds and other assets.
ILHAN OMAR'S FINANCIAL TRANSACTION TAX WOULD HURT MAIN STREET: GAMESTOP HEARING EXPERT
The Fed has said interest rates will remain low through a minimum of the top of 2023.
Musk’s decision to feature bitcoin to Tesla’s record followed an exchange he had with MicroStrategy CEO Michael Saylor, who in December announced his company had accumulated $1.3 billion worth of the cryptocurrency.
MicroStrategy in the week announced plans to boost $900 million through a convertible debt sale, saying it might use the proceeds to shop for more bitcoin.
“Bitcoin is nearly as bs as paper money ,” Musk said. “The keyword is ‘almost’.”