Zero interest rate, destruction of Tesla and bitcoin to free up money in large countries. US Treasury Bond interest rate and dollar value rebound.
With the recent rebound in US Treasury yields and dollar value, Tesla and Bitcoin are drawing attention to whether the liquidity market will continue. As Tesla, the growth symbol and bitcoin betting on the dollar's fall, are at the forefront of the liquidity rally, liquidity risk is expected to be reflected first.
Bitcoin rose 2% from the previous day to $ 36,630 per coin on the 18th (local time), according to data from CoinMarketCap, a cryptocurrency information company on the 19th. The market capitalization is $ 6.815 billion (752 trillion won). Bitcoin price in Korea also increased by 40 million won. As of the 15th, Tesla's market capitalization was $ 7.831 billion (865 trillion won), ranking fifth in the US stock market after Alphabet (Google's parent company). Tesla's share price is up 743% last year and 17.1% this year. The price of bitcoins is up 300% last year and 26.3% this year.
Zero interest rate behind Tesla's mileage?
Many Wall Street analysts who criticized Tesla for being on the brink of bankruptcy had to file reports admitting that the analysis was flawed. The target price has also been increased. Some believe that the rise in Tesla's share price is driven by the rush of individual investors. Stock purchases by domestic investors abroad have also focused on Tesla. According to the Korea Securities Depository, the number of Tesla shares held by domestic investors on the 15th was $ 10,149.57 million (KRW 11,1584 billion), more than three times the number of second-hand Apple a place.
Optimists argue that the zero interest rate justifies the high market value of a growing company like Tesla. At a zero interest rate, since the discount rate for converting future profits to present value is close to zero, the company's valuation can rise rapidly. In such a case, if the interest rate rises, the discount rate will rise, which could hurt Tesla's stock price the most. The 10-year US Treasury rate has risen from 0.51% in August last year to 1.08% now. American investment firm Compound Advisor has diagnosed: " Tesla's share price depends on whether the company continues to grow in the future, and investors will be willing to buy even at high prices ".
On the 8th, as Tesla's stock price peaked, Michael Bury, CEO of Science Asset and a prominent US hedge fund investor, said, "My last big short (short) is getting bigger and bigger." This means that Tesla's stock price bubble has burst. American bank Wells Fargo also claimed in " Ten Prophecies of 2021 " that " Tesla could take the America Online (AOL) train, an Internet company now extinct in history ".
Bitcoin for dollar?
Bitcoin proponents are convinced that the decline in the value of key currencies such as the dollar due to the release of money in large countries, along with gold, is the fuel for the rise in the price of bitcoin. UK-based asset management company Ruper, which has invested 2.5% of its assets in bitcoin, said: "We have a small but reliable insurance against the devaluation of the world's major currencies." It is trying to recover from the downtrend stopping from behind and the international gold price, aiming to get back $ 2,000 an ounce, has been pushed back to the $ 1,820 range.
Some argue that this Bitcoin rally differs from the past in that it is run by institutional investors rather than individuals. In response, the British weekly The Economist denied: " Large pension funds tend to avoid assets like bitcoin that cannot generate future cash flows ".
If the dollar gets strong, global liquidity will contract and negatively impact both Bitcoin and emerging markets. Heungkuk Securities researcher Song Jae Kyung advised, " You shouldn't just stand in line at the end of the line thinking that " this time is different ".
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