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Making sense of the markets this week: February 15, 2021

February 12, 2021 Dale Roberts
Making sense of the markets this week: February 15, 2021

Elon Musk sends bitcoin to the moon—or is that Mars?

Elon Musk the (never know what’s he’s going to do or say next) CEO of electric vehicle maker Tesla (TSLA) announced that Tesla has invested US$1.5 billion in bitcoin. Tesla will also accept bitcoin for payment of vehicles. That, of course, will provide another bitcoin revenue stream and may accelerate Tesla’s bitcoin accumulation even further. 

(Musk is also the CEO of SpaceX, so maybe one day you’ll be able to pay for your trip to Mars with bitcoin.) 

The Tesla move is a giant leap for bitcoin’s journey into the mainstream, as an accepted currency, or at least an allowed method of payment in many situations. Personally, I am also of the mind that bitcoin will continue the march toward becoming an accepted and widely-used portfolio asset

And, full disclosure, I have 5% bitcoin allocation by way of the 3iQ funds. Naturally, I am excited to see that theme of acceptance play out, and to see more major backers “come on board.” 

From that CoinDesk post I linked to above… 

“Bitcoin’s price shot up more than 14% after Tesla’s disclosure to a new all-time high of $44,801, based on CoinDesk’s Bitcoin Price Index. The jump pushed bitcoin’s year-to-date return to about 50%, versus 3.9% for the Standard & Poor’s Index of large U.S. stocks. Bitcoin gets a quick moonshot. Is Mars next? Elon Musk shows once again how he can move markets. That said, this is another giant leap for bitcoin kind.”

On Tuesday, Feb. 9, the price of bitcoin appeared to flirt with the $50,000 threshold as it reached almost $48,000. On Friday morning, as I write this, bitcoin is trading in the $46,800 area. By the time this is posted, who knows where the price may be? It is an extremely volatile asset, to say the least. Investors should be keenly aware of that reality. 

All said, the apparent endorsement of Elon Musk and Tesla is a significant notch in the bitcoin belt. Has this opened the door for other major corporations? Rumours and speculation are flying. The prospect that Apple or Oracle would embrace bitcoin has been put on the table. In fact, RBC Capital Markets suggested that Apple should create a crypto exchange and buy bitcoin

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