Despite the impressive return on investment that Bitcoin has been boasting since its launch, there are still critics who are surprised Tesla has invested its shares into cryptocurrency.
In conversation with Financial Times, Jerry Klein, managing director at Treasury Partners offered that he sees no use case in corporate cash going towards the cryptocurrency market. In the same report, financial Times noted that Campbell Harvey of Duke University slated Tesla’s Bitcoin purchase as a risky endeavour which won’t resolve any market uncertainties as it won’t hedge against fiat.
Other criticisms from analysts and field experts say that Tesla acquiring Bitcoin could put a strain on the safety of shareholders given the volatility and rollercoaster price of the cryptocurrency market. Pointing to previous crashes following bull rallies, the critics see this move as a risky one not just for Musk but for those holding stocks across the board.
Critics missing the mark
It’s worthwhile noting that while Bitcoin has inherently been volatile and the market has faced crashes, there has recovery after each time the price sinks. A year ago, Bitcoin was about to face a massive dip in price heading into a period of financial uncertainty as the global pandemic shut industries down. However, as it stands currently, the Bitcoin price is sitting around the highest it has ever.
Other firms buying Bitcoin
Tesla’s move to acquiring Bitcoin also follows in the footsteps of other institutions who have been investing in the cryptocurrency market. Notable, Grayscale started acquiring Bitcoin and has been exponentially increasing how much it has been storing. MicroStrategy is also worth noting, holding $1.1 billion USD worth of Bitcoin in the past six months and making a 200% increase on this purchase.
Michael Saylor of MicroStrategy CEO suggested to Musk in a tweet recently and followed the news of Tesla’s purchase with congratulations.
— Michael Saylor (@michael_saylor) February 8, 2021
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To invest is to put money into the hope of acquiring a profit in the near future. Many people are unsure how to invest money for these reasons and thus they fail to earn back their investment, lose their money or even worse, lose everything. Investment can be done in many ways. You can invest in a company that has just started up. You could also purchase shares in a mutual fund. Regardless of the method you choose to invest, it is important that you research thoroughly before investing any money so you have a better chance of making a profit.
Short-term Investments: Cash equivalents are investments that are paid for in cash less the accumulated interest on the principal. Examples are savings accounts and certificates of deposits. Many companies offer a variety of these types of investments along with many that require no formal account. You may also want to consider certificates of deposits, but they come with a higher risk since they are not insured. A good way to invest in cash equivalents is through saving in an interest bearing account such as the T-note and Certificate of Deposit (CD) methods.
Long-term Investments: When you invest in stocks, bonds, or mutual funds, you are working to obtain profits. This is how the large businesses of the world make their bread and butter. These businesses must be profitable in order for them to survive and reinvest their profits. They invest in companies that are not likely to go bankrupt because if they did, the owners and stockholders would go out of business. If you want to make sure that your money is doing well and that you will be able to use it for investments in the future, you should stick with stocks, bonds and mutual funds.
CDs: Savings accounts come in two forms, bank CDs and certificate of deposit (CD) accounts. Both of these offer potential returns with a high degree of safety. The one difference is that bank CDs have a preset time limit to certificates of deposits do not. Savings accounts can be used as a source of regular income and you do not have to concern yourself with making sure your money grows at a pace that will allow you to reach your financial goals. Savings account allows you to use it for investments as and when you want. It can also be used to save against emergencies as well.
Bonds: These types of investments provide potential returns when the market does not move very much. In other words, bonds are considered a conservative type of investment. There are many different types of bonds and you should carefully examine the advantages and disadvantages of each before investing. You can find these types of bonds offered by companies who do not manufacture cars, houses, or anything else that requires heavy investment.
Other Potential Investments: Real estate is another area that is often overlooked as a potential investment vehicle. It is a good idea to check with real estate agents to see if there are any investment properties available for you to invest in. They may be able to show you properties where other long term investors have invested in and are currently growing in value. You can then purchase these properties for less than you would personally be able to afford and generate income from them for years to come.