The profit of Bitcoin speculation surpasses Tesla, and Musk is also "out of the real to the virtual"?
Recently, Tesla spent US$1.5 billion to buy Bitcoin and became a large entity company speculating on Bitcoin. It is also a very appealing top brand company. It immediately attracted great attention from the market. There were even media questions. Is Skr not doing his job properly and starting to break away from reality?
In February, Bitcoin broke new highs again. Since then, there have been large fluctuations. Now even Tesla’s CEO Musk has stopped "speculating coins", which has aroused many concerns.
After Bitcoin entered the financial market, through the global integration of the Internet, it has become the largest casino in human history.
In other words, although Bitcoin cannot become a universal currency in the world, in addition to being a money laundering tool, Bitcoin is a seemingly non-existent gambling chip.
In fact, the price of Bitcoin has risen and fallen sharply recently. Long and short have taken turns to "explode" many times. While some people are making a lot of money, more people are ruined.
For example, recently, Bitcoin fell from its highest point of US$58,355 to below US$47,500. In less than 24 hours, 340,000 people broke their positions, and the amount of liquidation reached more than 20 billion. Many of these speculative gamblers even have contracts as high as 1,000 times. In other words, while hoping to get rich overnight, these people will often go bankrupt overnight.
Since the price of Bitcoin is highly prone to volatility, rising and falling continuously, why did Musk choose to expose his company to the huge risks of Bitcoin?
Tesla's statement to the SEC made it clear that investing in Bitcoin is a good opportunity to diversify cash and cash equivalents. Obviously, Tesla's purchase of Bitcoin is just a speculation. One of the main purposes is to solve Tesla's cash flow problem as a means of hedging the company's stock price.
Generally speaking, physical companies hold large amounts of cash or cash equivalents, such as treasury bills or commercial papers, to provide operational liquidity and generate revenue. This is a normal operation.
Due to the trend of Tesla's stock price, it has soared by more than 700% in 2020, and it has formed a huge bubble (its P/E value is thousands of times). Therefore, once the stock price drops, there will be a gap in cash flow, and Tesla's profit from selling cars in 2020 is not ideal, only 721 million U.S. dollars, it is not as good as buying the gains from Bitcoin appreciation (more than 1 billion U.S. dollars) .
Musk's holding of soaring bitcoins will make the company's statements very beautiful, give shareholders and investors an explanation, and can support the stock price or prevent losses caused by the decline in the stock price.
Tesla wrote in the statement: "We have updated our investment policy to provide us with greater flexibility to further diversify and maximize our cash income..." Tesla acknowledged that this move is not without risks. Because the price of Bitcoin may plummet: "If we hold digital assets and their value drops relative to our purchase price, then our financial situation may be harmed."
It can be seen that Musk is very clear about the nature of Bitcoin, but Tesla, as a leading brand company, invests in Bitcoin, obviously endorsing this so-called "emerging asset" because of Tesla’s huge market presence. Influence, has a leading effect, has a large number of fans.
In fact, Bitcoin’s previous surge, with Tesla’s purchase of US$1.5 billion, can be said to be “involuntary”. A single Musk tweet directly raised its price by 18%.
This in turn highlights the characteristics of the Bitcoin Ponzi scheme: the money that benefits from the Ponzi scheme does not come from its own profit, but only from the money of subsequent investors. It is usually by "super high returns" to attract new investors, these returns are either abnormally high or consistently abnormal.
The "candy" in the early stage was the "bait" for the leeks, and then the dealer began to lift it, causing the illusion of the target "steady rise" (called "market value management" in the industry). At the same time, the news side cooperated with the concentrated momentum to attract more people. After receiving the order, when the buying order was strong enough, the dealer quickly shipped out and sent almost free chips to the high order taker, causing the target price to plummet.
It is precisely because the Ponzi scheme must rely on continuous injection of funds to maintain it, it is doomed to fail, and once it fails, it will lead to a large number of investors' financial losses.
And, if Tesla loses money in this wave of speculation, it will be stronger than ordinary retail speculators, at least it can strengthen the company's "brand effect." In fact, the probability of loss for Tesla’s speculation is not high because it is at the apex of the pyramid. After buying, through speculation, the price can be raised at any time, at least to get rich paper wealth.
However, Tesla unexpectedly announced that it would accept Bitcoin as payment for car purchases. This is contrary to the consensus in the industry that Bitcoin is "inefficient". When the news came out that "the SEC will investigate whether Musk's related tweet is suspected of manipulating the market", Bitcoin immediately plummeted.
Recently, US Treasury Secretary Janet Yellen warned that Bitcoin is a “highly speculative asset” and expressed concern that investors will lose money. Currently, in many countries, virtual currency transactions including Bitcoin are prohibited.
However, Tesla's speculation in Bitcoin is not necessarily a way for Musk to go from the real to the virtual, but may be a means of raising more funds to the real.
Because some of the projects that Musk has invested in and operated, including SpaceX to explore Mars, SolarCity for new energy, Hyperloop (hyperloop super high-speed rail), and Neuralink (neural technology and brain-computer interface), which is known to affect the future of mankind, are currently advancing. Among them, they are all very money-burning and require astronomical funds to support them.
Post time: Mar-05-2021