A week away from the office and markets seemed to have become even madder. As I started my break the Reddit versus Wall St saga was still rumbling on. Now I return to news that Tesla has ploughed $1.5bn into bitcoin, mashing two bouts of market madness into a single story and sending the price of both the cryptocurrency and Tesla’s share price soaring.
Bitcoin bulls latched onto the purchase as a sign that corporate attitudes towards the alternative asset are softening, and a precursor of the coming demand from treasury departments that would finally take cryptocurrency mainstream. I’m not yet convinced – risky cash management strategies would be a complete u-turn from the hatch-battening most companies have been doing in response to the pandemic. As Neil Wilson put it in one of his Trader articles this week, “this is normal FX risk x100”. That may be an underestimate – whipsaw volatility makes this an asset to be avoided by anyone unable to stomach the prospect of big losses. Even if bitcoin is flirting with respectability, other areas of the crypto market are much more of a wild west, as the Financial Conduct Authority recently warned. For more on this, listen to our free podcast, Not Your Normal Finance Show which this week focused on the recent crypto currency madness.