Bitcoin Climbs Above $53,000 as Musk Backs Crypto Over Cash

(Bloomberg) -- Billionaire Elon Musk defended Tesla Inc.’s $1.5 billion Bitcoin investment on Twitter, calling the cryptocurrency a “less dumb” version of cash.

“When fiat currency has negative real interest, only a fool wouldn’t look elsewhere,” Musk said in a reference to the sub-zero returns on cash caused by negative-yielding debt. The comments pushed Bitcoin to a record on Friday, with prices climbing above $53,000.

In a sense, Musk’s comments sum up one of the big issues facing markets this year. With so much cash being pumped into the financial system from governments fighting the pandemic, investors are increasingly worried about inflation and looking for alternative places to put their money.

“Having some Bitcoin, which is simply a less dumb form of liquidity than cash, is adventurous enough for an S&P 500 company,” Musk wrote, adding that Tesla’s decision to buy Bitcoin doesn’t directly reflect his opinion.

“Bitcoin is almost as bs as fiat money. The key word is ‘almost,’” he added.

Bitcoin was up as much as 2.4% to $53,263 as of 9:55 a.m. Friday in New York. Just this week, prices have jumped about 10%.

Musk’s posts were in response to remarks by Binance Holdings Ltd.’s chief Changpeng Zhao. In a Bloomberg Television interview, Zhao wondered why Tesla bought Bitcoin if he’s so “gung-ho” on Dogecoin. Musk said he’s an engineer, not an investor, and doesn’t own any publicly traded stock besides Tesla.

This year, the billionaire has tweeted about cryptocurrency-related topics more frequently, with his memes and jokes about Bitcoin and Dogecoin -- a tongue-in-cheek digital currency -- often moving markets.

(Updates with record prices in second and sixth paragraphs and chart)

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