There he goes again: Three days after sending bitcoin up 19% with a one-word tweet, Tesla Chief Executive Elon Musk on Monday pushed the digital currency up 7% with a few more words.
On Friday, he just tweeted “bitcoin.” On Monday, Musk said on social-audio app Clubhouse that “bitcoin is a good thing,” Bloomberg reports. He said he’s “late to the party” and should have purchased bitcoin eight years ago.
Just as occurred on Friday, Musk’s impact on bitcoin didn’t last long. The cryptocurrency recently traded at $33,856.78, up just 1.2%.
In recent weeks, speculators have lost their minds for bitcoin; stocks with weak fundamentals such as GameStop GME; clean-energy stocks; special purpose acquisition companies, initial public offerings and other risky investments.
With interest rates near zero, investors are thirsty for returns. And the frenzied quest for good returns has created market mania, where retail investors are eager to jump into any asset that moves.
Commentary on social-media sites such as Reddit is accelerating the moves.
Perhaps the party can keep going until interest rates rise. If economic growth registers 4% or more this year, as many analysts forecast, perhaps that will push rates higher and all the bubbles will burst.
Or some kind of exogenous event could end the party, much as the covid pandemic blew up financial markets in March.
But until then, it wouldn’t be surprising to see bubbles form in more assets, as individual investors continue their headlong rush into the flavor of the day.