According to Miami mayor Francis Suarez, tech tycoon and Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk highlighted a problem with Bitcoin (CRYPTO: BTC) that reduces its utility as a financial asset.
What Happened: Suarez told During a CNBC interview, Suarez said that he’s a “big fan of Elon Musk” but suggested that him being able to move Bitcoin’s price by 10% to 20% with a single tweet is a problem.
He explained that this kind of price volatility shows that Bitcoin can’t be used as a hedge against fiat currency.
“When one person has the ability to make one tweet and spiral the price of a particular asset at that level — you know, 10%-20% as opposed to 1% or 2% or 3%…
You know, there’s volatility in everything, there’s volatility in commodities, there’s volatility in dollars but not that kind of volatility. Once that works itself out with enough transactional volume and much more stability then I think that’s something that certainly could be a hedge against a fiat currency,” Suarez explained.
Why It’s Important: In mid-May, Elon Musk tweeted that his electric car manufacturing company Tesla would stop accepting Bitcoin as means of payment due to environmental concerns — later, it was suggested by market observers that he took this action as a result of pressure by institutional investors.
Bitcoin took a hit after the announcement, and Musk also later kicked the already-lying coin, suggesting that Tesla may dump its Bitcoin holdings acquired in a $1.5 billion investment made in early February.
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