Today we follow-up our news from yesterday, which revolves around the most fascinating cryptocurrency phenomenon of this month – Bitcoin’s additional wild rally behavior that many are linking to Tesla and its founder, Elon Musk.
Omkar Godbole at Coindesk explains why Bitcoin is again surging from an all-time high of $40,000 up toward $50,000 (roughly $45,900 at press time).
The market, Godbole says, is pricing in the eventuality of other companies following Tesla’s lead and investing in Bitcoin in terms of treasury allocations.
“While several publicly listed companies such as MicroStrategy have adopted Bitcoin as a treasury asset over recent months,” Godbole notes, “Tesla’s move is notable given that it is the first Fortune 500 company to diversify cash holdings into the cryptocurrency.”
It’s not so much the money, he says, citing Tesla’s $1.5 billion pledge, as it is “signaling effect and market reflexivity” that will drive BTC higher.
“’Reflexivity’ is a theory that a positive feedback loop between expectations and economic fundamentals can yield a substantial price rally,” Godbole writes. “Tesla’s bitcoin buys may have validated the long-held bullish narrative that the cryptocurrency acts as a reserve asset. More buyers, therefore, could join the market, putting upward pressure on prices.”
The seasoned analyst also points to a mountain of call options as additional fuel for a new Bitcoin price rally to take the coin higher than it’s ever been before – which is where it’s at now…
In caveats, Godbole looks at an emerging trend line rising from 10K, and evaluates hopes for that to continue, while others refer to today’s behavior as the “Elon Musk rally.”
Some are also looking to oracles like Michael Novogratz of Galaxy Digital for suggestions that Bitcoin will hit 100,000 by the end of this year. Harry Robertson at Markets Insider reports on Novogratz’s bullish sentiment, providing this Novogratz quote indirect from Bloomberg:
“You’re going to see every company in America do the same thing [as Tesla]…One of the things that connect bitcoin and Tesla and solar stocks and ESG investing is millennials and gen Z. Young people are buying into the future, and they see cryptocurrencies – bitcoin and other cryptos – as their currencies.”
Will young people and corporations and everyone else fuel further BTC spikes as they pile on? Stay tuned.
