Elon Musk sounds caution on cryptocurrency: ‘Don’t risk life savings, invest with caution’

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May 07, 2021 5:14 PM

Tesla’s Elon Musk -- a long-time proponent of cryptocurrencies -- has sounded a note of caution for investors looking to gain from the boom in the prices of Bitcoin, Ethereum, Dogecoin and others

Elon Musk, tesla, Bitcoin, cryptocurrency, dogecoinLast month Elon Musk said that Tesla Inc has sold 10 per cent of its Bitcoin holdings to price the liquidity of the cryptocurrency. Image Reuters

Tesla’s Elon Musk — a long-time proponent of cryptocurrencies — has sounded a note of caution for investors looking to gain from the boom in the prices of Bitcoin, Ethereum, Dogecoin and others. Elon Musk said that while he believes that crypto could be the default future currency of the earth, nonetheless, people shouldn’t invest their life savings into cryptocurrency. “First of all, I think people should not invest their life savings in cryptocurrency. To be clear, I think that’s unwise,” Tesla’s CEO warned in a video released by TMZ.

So far in 2021, Elon Musk tweets have sent Bitcoin and Dogecoin prices soaring. Earlier this year, Musk added hashtag bitcoin (#bitcoin) to his Twitter bio, which sent Bitcoin prices to record highs. In the following month this year, Musk tweeted ‘Doge’ and then followed it with another tweet saying: ‘Dogecoin is the people’s crypto’; and ‘No highs, no lows, only Doge’.

When asked about Dogecoin, Musk was seen saying that “the point is that dogecoin was invented as a joke, essentially to make fun of cryptocurrency”. He also added that fate loves irony, and what could be the most ironic outcome is that the currency that was invented as a joke in fact becomes the real currency. “Cryptocurrency is promising, but please invest with caution,” Elon Musk tweeting the TMZ video.

“If you want to sort of speculate and, I don’t know, maybe have some fun, I mean, there’s a good chance that crypto is the future currency of earth” he said. When asked about which one is it going to be? “It could be multiple,” he replied. Elon Musk further said that it should be considered speculation at this point and cautioned not to go too far on the crypto speculation part.

Last month Elon Musk said that Tesla Inc has sold 10 per cent of its Bitcoin holdings to prove the liquidity of the cryptocurrency. While he clarified that he has not sold any of his own bitcoin, retaining his personal investment. In a tweet last month, Elon Musk said that Tesla sold 10 per cent of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on the balance sheet. During the January-March quarter of the current year, Tesla had invested $1.5 billion in bitcoin, and then trimmed its position by 10%, which contributed to a small gain in its first-quarter financials.

The second-largest cryptocurrency Ethereum’s market capitalisation now stands at $403.84 billion, which is nearly half of Bitcoin’s $1 trillion market value. According to the data from CoinMarketCap, Ethereum price has zoomed over 16 times from $206 as of May 7, 2020, to $3,465 as of May 6, 2021, while the market cap has soared over 17 times from nearly $23 billion.

The suggestions/recommendations around cryptocurrencies in this story are by the respective commentator. Financial Express Online does not bear any responsibility for their advice. Please consult your financial advisor before dealing/investing in cryptocurrencies.

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