But Musk’s recent statement that Tesla would no longer accept bitcoin as payment for its cars due to crypto’s massive carbon footprint as well as a series of confusing and somewhat contradicting tweets about the company’s bitcoin holdings has the investment world in its arms.
Bitcoin still has a lot of fans
Palantir CFO David Glazer said on a profit call earlier this month that the company was discussing the possibility of adding Bitcoin to its balance sheet and was “open to business” to accept the crypto as payment from customers.
“We still see other companies investing in Bitcoin because they see it as a store of value, digital gold,” said Stephen Kelso, market leader at ITI Capital, in an interview with CNN Business.
Kelso said Bitcoin is still viewed by investors and companies as a means of hedging against inflation.
Still too volatile for many in Corporate America?
Bitcoin’s breakneck volatility continues to be a major problem. It can be one thing for a company to keep a small amount of crypto on its balance sheet in search of a sexier alternative to cash and government bonds in hopes of better returns.
But can mainstream companies – especially those with large consumer goods companies – really run the risk of customers being able to buy and sell goods with such a volatile currency? Probably not.
“In order for cryptocurrencies to be widely distributed and embedded, a certain degree of stability is required,” said Danyaal Rashid, thematic analyst at GlobalData, in a report on Monday.
“This is certainly the case if people are expecting to make payments using crypto. If we anticipate weekly price fluctuations of up to 20%, payments become impossible,” added Rashid.
Nevertheless, investors have a legitimate interest in cryptos. And much of it – for better or for worse – can be due to musk.
“It’s a strange phenomenon when your risk committee has to seriously discuss SNL. But I think it helps draw more investors into the battle,” said Michael Kamerman, CEO of Skilling, a retail brokerage firm focused on cryptocurrencies.
Kamerman said he thinks there will be a possible cleanup in the cryptocurrency market. There are just too many at the moment.
“The dust has to settle, but we have something to do with cryptos that is similar to the late 1990s and e-commerce,” said Kamerman.
Other experts say investors need to get used to the volatility. The crypto world moves much faster than stocks, bonds, and traditional currencies.
But that too will pass when the industry begins to mature.
“A lot of Bitcoin investors are still looking to Musk. It will be a while before we are completely isolated from it,” said Ben Weiss, CEO of CoinFlip, a crypto ATM company. “But Bitcoin is stronger than a company and a person.”
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