‘Bitcoin’: a Tesla-sponsored ticking time bomb

A year ago, at covid-19 It was just one chinese disease that I was going to leave “one or two cases in Spain” and the bitcoin It was trading at $ 9,845. The cryptocurrency was experiencing its second wave of silent high but almost nobody paid attention to it. The fury – and fear – for it seemed to be over. Above all because of the enormous pressure made by world supervisors warning of the risk of this cryptocurrency and its peers.

This Tuesday, a bitcoin it was exchanged for $ 46,768, which represents a rise of 375% in just one year. The last rally that the cryptocurrency has lived, and that has made all the alarms sound again, it has been sponsored by Tesla, the great promise of the car that also trades at stratospheric multiples. The company is worth 812,000 million dollars and only because of the expectations that Elon Musk’s projects generate in the market.

The same, or something similar, happens now with the bitcoin. Musk has invested 1,500 million dollars in the cryptocurrency and has ensured that their cars can be purchased through that medium. A somewhat misleading ad as the vehicles will continue to be paid in dollars.

“The claim that Tesla will accept bitcoin as payment for their cars is simply a gesture towards the gallery, since neither the client nor any company would want to set their prices in a currency that can go up or down 10% in one day ”, he says Geoffrey Smith, Market Expert at Investing.com.

The fact that Tesla resorted to such deceptive arguments should make one instantly suspect of his true motivation. Tesla’s unit of account will remain the dollar for any significant period of time, “recalls the analyst.

On the other hand, there is the alert that the National Securities Market Commission (CNMV) and the Bank of Spain, due to the risks it entails as an investment due to “its extreme volatility, complexity and lack of transparency”, which qualifies them as a “high risk bet” for small savers.

This is a caveat that is not just focused on Bitcoin. Both supervisors talk about cryptocurrencies at all times.

The risk of investing in ‘bitcoin’

After detecting a “significant” increase in advertising, sometimes “aggressive”, to attract investors in recent months to cryptocurrencies such as bitcoin y Ether, supervisors recall that these are “complex instruments, which may not be suitable for small savers.”

Likewise, in the joint communiqué they state that the price of cryptocurrencies, subject to high volatility in recent months, “carries a high speculative component that can even suppose the total loss of the investment “.

And it is that from the legal point of view, cryptocurrencies are not yet considered a means of payment, do not have the backing of a central bank or other public authorities and are not covered by client protection mechanisms such as the Deposit Guarantee Fund or the Investor Guarantee Fund.

Physical representation of a ‘bitcoin’, the virtual currency.

Further, There are leveraged derivative products linked to cryptocurrencies that allow indirect investment in these, which further increases their complexity and the possibility of suffering losses greater than the initial investment, which is why they require great knowledge.

On the other hand, supervisors have noted that cryptocurrency prices are formed in the absence of effective mechanisms to prevent their manipulation, such as those present in regulated securities markets. On many occasions, they insist, these prices are also formed without public information to support them.

Regarding liquidity, CNMV and Bank of Spain warn that many of these cryptocurrencies may be lacking the necessary liquidity to be able to undo an investment without suffering losses significant, especially since their circulation among investors, both retail and professional, is very limited.


Source: Vozpópuli by www.vozpopuli.com.

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