Elon Musk and the meteoric rise of Bitcoin

In a turbulent week whereby a billionaire sent the price of Bitcoin surging Patrick Sullivan examines the implications for the credibility of cryptocurrency and the watershed moment whereby investment in crypto became a mainstream practice.

The price of bitcoin rocketed on Monday after Elon Musk, the entrepreneur and billionaire Tesla CEO, publicly announced that he was a ‘supporter’ of the cryptocurrency in a social media post.

He said, “Bitcoin is a good thing,” in a broadcast on social audio app Clubhouse on Monday. Musk said he was “late to the party” in backing bitcoin. Since then Bitcoin prices have rise to above $38,000 on Friday after Musk changed his biography on the Twitter social network to simply “#bitcoin”, adding fuel to the investor frenzy.

Last week Musk also jumped on the GameStop investment bandwagon, tweeting ‘Gamestonk’, a play on stock market memes, alongside a link to the WallStreetBets forum on Reddit, where users had banded together to pump up the value of the game retailer’s shares.

Recently Musk became the richest person in the world at the start of the year as the price of shares in Tesla, the US electric car pioneer, soared, but in recent weeks he has used his considerable following to talk up other investments.

Speaking to The Commentator, Stephen Kelso, Head of Markets, ITI Capital said, “Entrepreneurs like Elon Musk and MicroStrategy’s CEO, Michael Saylor are rapidly raising the profile Bitcoin as a trusted investment and expectation is building that more tech and corporate CFOs will follow their lead, backing what is now considered to be the ultimate long duration treasury reserve asset.

“We’ve seen a swelling in demand for Bitcoin from clients in the UK and across core emerging markets, which has sequentially reached new all-time highs in the currencies of the BRICS countries and other emerging markets.

“We believe the biggest thing that has changed in Bitcoin over the Global Currency Reserve (GCR) is the personal career risk of professional allocators and investors who now need to be able to point to the more fiduciary-responsible way to access Bitcoin.

Kelso added, “The rate of change of the balance sheet expansion at the Fed and rest of the G4 since the Great Covid-19 Recession has brought these conditions to developed markets.

The debasement of currency that is driving the asset-price inflation across asset classes is a familiar phenomenon to emerging market wealth and investment managers.”

Patrick Sullivan is Founder and Chief Executive of Parliament Street

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