Jeff Sica of Circle Squared Alternative Investments argues that Treasury Secretary Janet Yellen is “scared to death” of bitcoin because it is seen as a threat to the Federal Reserve.
Tesla’s shares fell in a bear market, down more than 20% from the recent high, and some analysts suggest the company’s ties to bitcoin are to blame, as the currency takes a beating after more cautious comments US Treasury Secretary Yellen.
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 698.84 | -15.66 | -2.19% |
The stock, which fell about 21% from the $ 883.09 closing high on January 26, fell along with digital currency. Bitcoin on Tuesday fell about 17%, dropping to $ 48,170, after reaching its highest record of $ 58,332, as tracked by Coindesk.
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Courtesy: Dow Jones Market Data Group
The electric vehicle maker’s $ 1.5 billion investment in the currency to diversify its cash, as described in a document with the Securities and Exchange Commission last month, could be a double-edged sword.
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“Investors are starting to tie Bitcoin and Tesla on the hip. While Tesla on paper earned about $ 1 billion from Bitcoin in a month that exceeded all of its 2020 EV profits, the recent 48-hour Bitcoin sale and increased volatility has prompted some investors to abandon this name in the short term, ”he wrote. analyst Dan Ives of Wedbush, who also noted that he believes the move was “strategic for the long term.” Ives classifies the shares as a retention, but sees additional gains. “We keep our target price of $ 950 and $ 1,250 high case” he added.
Bitcoin volatility this week also came, as Yellen reiterated cautious comments when asked about the future of a digital currency.
“Bitcoin and I have said this before – it is widely used as a transaction mechanism as it is used, I fear it is often for illicit financing. It is an extremely inefficient way of conducting transactions. And the amount of energy that is consumed in processing of these transactions is impressive. But it is a highly speculative asset and, you know, I think people should be on the lookout. It can be extremely volatile and I worry about the potential losses that investors can suffer, “said Yellen during an interview in New York Times DealBook DC policy project on Monday.
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Yellen’s comments followed a clarification by Tesla’s CEO, Elon Musk, last week, about what was behind his company’s stake in the digital asset.
“When the fiat currency has negative real interest, only a fool would not look elsewhere,” tweeted Musk last week.