17:54Elon Musk: Bitcoin Worth Investing in Right Now
Recent news that Tesla CEO Elon Musk had invested US$1.5 billion in Bitcoin has sent digital currencies skyrocketing.
The reason cited by Musk for his investment in Bitcoin? A diversification of Tesla’s cash holdings and better returns on this cash. Indeed, cash is earning next to nothing these days. Bond rates are still trading near all-time lows, and stimulus measures are likely to keep this the case for some time. Many investors looking to stash some dry powder away have started looking at various crypto-linked savings accounts that offer higher rates recently.
Musk’s move provides significant credence to such moves by investors. This validation of cryptocurrencies as an investment-grade asset to park cash has undoubtedly caused even the most liberal investors pause. After all, the volatility of cryptocurrencies doesn’t make for a good store of one’s wealth. The returns on these digital assets are great today, but can implode from time to time. Parking $1.5 billion in anything this volatile could backfire in a big way for Tesla — unless Bitcoin continues its remarkable rise. Let’s explore what the future may hold for crypto investors right now.
Where’s Bitcoin headed from here?
Today, the price of a single Bitcoin is around $60,000.
That’s a rather impressive return for investors. An approximate doubling of one’s money in around six weeks is nothing to sneeze at. Those sorts of returns are nearly impossible to get in equity markets without taking on a substantial amount of risk.
It appears that Elon Musk is bullish on this asset class not only as a store of value, but as an appreciating investment over the long-term. For those so inclined to follow in his footsteps, here’s one way to do so.
How to invest in Bitcoin?
This fund trades on the TSX and is more liquid and easy to trade than Bitcoin directly.
Again, I think it’s worth cautioning investors that Bitcoin and its cryptocurrency peers are highly volatile. These are not assets well-suited to conservative long-term investors. Any sort of investment that can double in six weeks, or lose 30% of its value in a couple days, is not one most investors would care to hold on to. The intrinsic value of Bitcoin and its peers is impossible to quantify, in my view. Thus, I’m on the sidelines with respect to this asset class.
If you’re bullish on the game-changing blockchain technology underpinning these cryptocurrencies and think the world will eventually shift to a Bitcoin-oriented payment system, then investing like Elon Musk could pay off. However, I’m not so sure these digital coins are worth what they’re trading at today.
Like these sorts of parabolic returns Elon Musk has produced? You have to read the following:
Should you invest $1,000 in Tesla right now?
Before you consider Tesla, you may want to hear this.
Motley Fool Canadian Chief Investment Advisor, Iain Butler, and his Stock Advisor Canada team just revealed what they believe are the 10 best stocks for investors to buy right now... and Tesla wasn't one of them.
The online investing service they've run since 2013, Motley Fool Stock Advisor Canada, has beaten the stock market by over 3X. And right now, they think there are 10 stocks that are better buys.
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