Musk and Saylor Talk Crypto, Dogecoin Jumps 10%

In developments that surprised absolutely no one, Elon Musk was a little mischievous on Twitter yesterday, stating that he “won’t sell” his Dogecoin. The comments came in a thread with – you guessed it – tenacious Bitcoin Michael Saylor, CEO of MicroStrategy, a software and bitcoin holding company. In other developments that, again, did not surprise anyone at all, Dogecoin jumped 10% on the back of the endorsement.

discussion of inflation

The topic was quite interesting, however. Musk’s question originally focused on inflation and what the Twitter community thought the rate would be in the next few years. With US inflation rising to all-time highs, the issue has been the subject of much discussion, with fears that it is quickly spiraling out of control. The Fed is widely expected to raise rates this week, following a CPI reading of 7.9% for February, as food and energy costs soar the most in 40 years. Combined with the fact that gas is at all-time highs, inflation is really the topic of the day as the Fed is about to rise for the first time in three years.

Perhaps Tom Brady reversed his retirement decision after filling up his car with gas, deciding his $475 million in career earnings wasn’t enough.

Bitcoin

Of course, Michael Saylor took this as his opportunity to launch the most polarizing inflation “hedge” of all – Bitcoin. Proponents often cite mathematically encoded scarcity – there will only be 21 million bitcoins, with the mining fee following a pre-set schedule. With 19 million bitcoins already mined and the final bitcoin predicted for 2140, capital flight into the scarce asset will intensify exponentially, or so the theory goes. There is no doubt that the debt crisis, skyrocketing inflation and continued institutional adoption of Bitcoin present a very intriguing case for “magic internet money” to represent the inflation hedge that has traditionally been occupied by gold. The bullish case is that if gold has a market cap of $12.7 trillion, assuming that Bitcoin takes its places and settles at the same value, extrapolating that market cap of $12.7 trillion and dividing by 21 million bitcoins equals over $600,000 per bitcoin.

portfolio management

Personally, I believe Bitcoin is poised to establish itself as a store of value. However, I often grit my teeth when Saylor begs people to mortgage their homes and buy more bitcoin, or to sell everything they have to dump it into cryptocurrency. Of course, I love Bitcoin and I agree with the macro-dominant view. But there is also risk management, and there is no getting around the fact that, at the moment, the asset is still frighteningly volatile. The average citizen with a mortgage simply cannot sustain the 20% daily withdrawals that Bitcoin can generate. Saylor is a billionaire and to me it seems like he has completely lost touch when he spews that evangelical Bitcoin rhetoric.

Musk then did what he does best, making Dogecoin up 10% on the simple phrase “I still own and will not sell my Bitcoin, Ethereum or Doge fwiw (if interested)”. A little more sensible and measured than his usual Twitter endorsements, and he painted a beautiful juxtaposition with Saylor’s rabid fanaticism, seeking to educate “those who seek advice on this topic” about inflation. No matter how you feel about Musk and Saylor personally, there’s no getting around the fact that the macro climate — rising inflation, manic gas prices, war in Europe — is raising all sorts of interesting questions about Bitcoin’s role in the environment. modern currency.