MarketGauge Group Managing Director Michele Schneider talks about her outlook for bitcoin and the oil industry.
Tesla Inc. CEO Elon Musk said that his inability to receive a return on his company’s cash was behind the decision to buy $ 1.5 billion in bitcoin.
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 784.36 | -3.02 | -0.38% |
“When the fiat currency has negative real interest, only a fool would not look elsewhere,” tweeted Musk on Thursday night.
Real interest rates are negative when the rate of inflation exceeds the nominal interest rate. Real yields, however, have been rising in recent weeks, as investors fear that the unprecedented amount of fiscal and monetary stimulus will bring inflation back. The 10-year real yield was around -0.8% on Friday, while the 30-year real yield was positive.
TESLA BUYS $ 1.5B IN BITCOIN, WILL START ACCEPTING CARS
Tesla earlier this month announced the purchase of $ 1.5 billion in bitcoin in an effort to “diversify and further maximize” the return on its cash. Tesla ended 2020 with $ 19.38 billion in cash and cash equivalents, as noted in a SEC filing. He also noted that he will soon be able to accept bitcoin as payment for his cars.
Tesla said it can invest more of its money in digital assets, gold bars, gold-traded funds and other assets.
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The Fed said interest rates will remain low at least until the end of 2023.
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Musk’s decision to add bitcoin to Tesla’s balance came after an exchange he had with MicroStrategy CEO Michael Saylor, who in December announced that his company had accumulated $ 1.3 billion in cryptocurrencies.
MicroStrategy announced plans this week to raise $ 900 million through a convertible debt sale, saying it would use the proceeds to buy more bitcoins.
“Bitcoin is almost as cheap as fiat money,” said Musk. “The keyword is ‘almost’.”