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Bitcoin And Tesla: The ‘Two Poster Children Of Speculative Froth’
Via Kevin Muir of “The Macro Tourist” fame
I am sure to madden a bunch of readers this morning, but here it goes nonetheless. For most of the spring and early summer, there were two poster children of speculative froth.
The first was Tesla. Egged higher by Elon Musk’s tweets poking fun at the skeptical short sellers, this stock was seemingly unstoppable. Rising from $240 in March, TSLA ticked at $387 in late June, squeezing the shorts by 61% in the space of one quarter.
Have a look
I think Bitcoin and Tesla are two great examples and likewise two big gambles on “First Movers”. While Cryptocurrency and Electric cars are the future there is probably too much certainty on which of each will be big parts of the future. If someone like Ford scoops Tesla’s market that share price is going to become downright absurd. Likewise there is certainly potential for BTC to not end up the ultimate choice for a global paypal/clearinghouse 2.0 system.
The big difference will between the two is that while adoption is ultimately the driver of lasting value for both. The circumstances that drive adoption are very different. I would not be surprised to see another heatup of BTC in the next 12 months for another 3-10x growth given the amount of money sloshing around and how small the market cap is. I would be surprised to see it in Tesla given the car market is seeing retractions, it just doesn’t seem ripe even for speculation.
If you read about the role of gold in the 1930s, you build one perspective on currency confidence. If you study the mechanics of Ripple today, you can connect the dots on free market transactions and mediun of exchange to see how pervasive block chain technologies can become.
I think these things wouldn’t blow up if the world was working with pervasive free market capitalism. I think BitCoin strength ultimately correlates with financial repression, which can be quantified much the way your friend quantifies complacency. And I wouldn’t omit that a BitCoin put would make capital flight pretty friction free anywhere in the world, if it were a free unrepressed world. With a limit below 25 million, the value seems to scale with the future scale of its transactions. How many people have gold in a vault? What for? BitCoin is a conundrum in the sense that its price movement is best understood using a dispassionate analysis of all actual uses and perspectives, just like all relative prices, perhaps?