With the pandemic fuelling a major move to the digital economy in the last year, is it any wonder that the subject of crypto currency is once again dominating the business news headlines? But the last week alone will highlight the instability of crypto when one considers the fortunes of Bitcoin and its investors.
If one single news story should demonstrate the impact of Crypto on business, it has to be Tesla’s decision to invest heavily in Bitcoin and announce that it will move to accept the currency as payment for its products. Tesla was just one of the big brands to make this statement in the last few weeks, alongside the likes of Mastercard and Blackrock, who are looking at how they too can use Bitcoin for transactions and investments.
Tesla Investment Drives Bitcoin Value
But whilst the announcement by Tesla has had a highly positive impact on the currency’s fortunes, sending it to a new high of more than £35,000, the same cannot be said for Tesla’s share price which has dropped, as markets respond with concern at the decision and the somewhat volatile fluctuations in Bitcoins value have impacted Tesla’s balance sheet.
Since the start of the year, Bitcoin has continued on its exponential growth path, rising more than 90% to its most recent peak, but within days that value had dropped again by around one-fifth, proving that it remains highly unstable, as currencies go.
The knock on for Tesla founder, Elon Musk, has been significant, with him being replaced at the top of the World’s rich list by Amazon Founder Jeff Bezos. Tough problem to have, but it does demonstrate the sheer scale of the values involved and just how volatile crypto remains.
Value Fluctuation is Significant with Crpyto
This most recent peak and trough is just one in a long line of similar incidents since Bitcoin, as one of the forerunners of crypto currencies, began trading just over a decade ago. Whilst the long-term picture, like most markets, is one of growth, few relatable markets or currencies will have been subject to both the scale and frequency of highs and lows that have seen the currency valuation change by up to 25% in just a matter of hours.
Whilst the number of big names looking at Bitcoin and other crypto currencies may be on the increase; it still remains a rather speculative investment with huge risk and little practical use – for now…