Elon Musk Is Holding Tight to These 3 Cryptos

By Gerelyn Terzo, Wealth of Geeks

It’s hard to ignore the sky-high inflation that has rocked the U.S. economy. Last month, consumer prices skyrocketed 7.9% to their highest level since the early eighties. If you haven’t experienced sticker shock when going to fill up your tank at the local gas station, chances are it’s just a matter of time before energy inflation hits your city, too.

During these uncertain times, billionaire entrepreneur Elon Musk feels the inflationary heat at his two companies — Tesla and SpaceX. The Tesla CEO took the opportunity to offer his social media followers some guidance on investing their money. Musk suggests owning “physical things” like real estate or stocks instead of the mighty dollar during times of high inflation. Like fellow billionaire Warren Buffett, Musk suggests owning shares of companies whose products you believe in.

Not to be outdone, cryptocurrencies are also included on his list of “dos” even though prices have been in the doldrums of late. Musk is in it for the long haul, revealing that he would not be parting with the trio of digital assets he owns in his investment portfolio: bitcoin, Ethereum, or Dogecoin, adding, “for what it’s worth.”

With a net worth of $206 billion, Musk’s advice is worth its weight in gold. Speaking of which, bitcoin, which is also known as digital gold, staged a welcome rally recently on the heels of a regulatory tailwind. However, the gains faded fast, and crypto prices were soon back nearly where they started. If bitcoin, Ethereum, and Dogecoin are good enough for Musk, they might be sufficient for other investors.

Source: Bloomberg/Wealth of Geeks

Crypto Trio: Bitcoin, Ethereum, and Dogecoin

Every crypto project worth its salt would like to be on Musk’s radar, but he has made it clear time and time again, there are only three digital assets for him. Let’s take them one by one.

Musk and Bitcoin’s Love-Hate Relationship

Musk has nurtured a love/hate relationship with leading cryptocurrency bitcoin. On the one hand, it was the first cryptocurrency that Tesla ever supported after Musk decided to let customers pay for their EVs with BTC. Musk made that announcement in early 2021, but the fanfare was short-lived.

As boss of an influential company operating in the renewable energy space, he soon decided that bitcoin mining, the process by which new coins are created, and the blockchain is secured, was guzzling too much energy. So he decided to renege on his bitcoin promise, vowing to revisit bitcoin payments later when the industry works out its energy issues.

Musk didn’t abandon bitcoin altogether. Last year, Tesla doled out $1.5 billion for bitcoin on its balance sheet instead of holding onto cash. At the time, Tesla said it was looking for “flexibility to further diversify and maximize returns on our cash.”

Ethereum’s Role

Ethereum, the second-biggest cryptocurrency based on market cap, is no slouch. The Ethereum price crossed the $4,800 level in November, proving its potential. These days it’s trading closer to $2,600, but it could have more runway for gains ahead.

Bill Barhydt, at the helm of crypto wallet company Abra, told CNBC that the Ethereum price could reach $40,000, a price range currently in bitcoin’s neck of the woods. By way of comparison, Ethereum is currently trading at about $2,500. Musk could put more distance between himself and the world’s second-richest person, Jeff Bezos, if Barhydt is right.

Barhydt pointed to Ethereum’s use cases as the catalyst for the potential gains, including its starring role in four of the blockchain’s hottest market segments:

  • NFTs
  • Decentralized finance (DeFi)
  • Gaming
  • Stablecoins

Dogecoin

Last but not least, Musk owns some Dogecoin, the crypto market’s very first meme coin. He believes that Dogecoin is a better medium of exchange than bitcoin, thanks to the meme coin’s speedy transaction times and cheap blockchain fees compared to its larger peer. Doge currently costs about $0.18 per transaction compared to about $1.26 for BTC. Bitcoin, meanwhile, works best as a store-of-value asset, like gold, according to him.

Musk recently put his money where his mouth is when he announced that Tesla would support Dogecoin payments for online merchandise sales. Dogecoin fans are still waiting for the day to purchase a Tesla EV with their favorite meme coin. In the meantime, they can spend their Doge on a Cybertruck hoodie or a Tesla trucker hat.

Musk’s tweets can move the crypto markets. This time, however, crypto prices failed to get any lift-off.

Wealth of Geeks

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