Elon Musk’s Twitter Showdown With Bernie Sanders Will Impact Bitcoin More Than Tesla

Over the weekend, Vermont Sen. Bernie Sanders got into an eye-catching spat with Tesla (NASDAQ:TSLA) CEO Elon Musk. The duo exchanged shots over taxing billionaires, Sanders’ age, and whether or not Musk should sell more Tesla stock.

A black Tesla (TSLA) Model S is parked between rows of charging stations.

Source: Grisha Bruev / Shutterstock.com

The fiery volley has certainly drawn in many commentators (even Michael Burry of Big Short fame joined the brawl). As a result, many investors have been worried about the implications of this showdown on Tesla stock. 

However, it isn’t Tesla that investors should be paying attention to right now. Instead, the spat between Sanders and Musk led to an unlikely discussion about Bitcoin (CCC:BTC-USD) and the impacts of inflation.

For savvy investors, this means now could be the perfect time to buy BTC on the dip.

From Tesla Stock to Bitcoin Benefits

This exchange began with Sanders tweeting about one of his favorite things — billionaires needing to pay more taxes. Musk, currently the world’s wealthiest person, was unable to resist taking a jab at Sanders, mocking him for his age. Musk then proceeded to ask Sanders if he should sell more shares of Tesla stock after selling 10% of his shares following a Twitter poll. His following voted that he should sell, and Musk did exactly that.

Sanders never responded to Musk’s question about selling Tesla stock, but he didn’t have to. The Tesla CEO closed out last week selling roughly $6.9 billion in shares, and offloaded another $930 million yesterday

While the controversy that stemmed from Musk’s decision to offload shares based on a social media poll caused TSLA to fall last week, Tesla stock has rebounded today and is currently up by 3%. Some experts, such as Burry, have suggested that Musk has other reasons for selling stock, such as needing to cover personal debts. More recently Burry implied in a now-deleted tweet that it may be because he just wanted to sell TSLA

But so far, the conclusion is that Tesla stock will exit this saga relatively unscathed. Sure, a near-term drop in shares briefly took the company’s market capitalization below $1 trillion, but TSLA bulls will continue to push ahead. Plus, the recent debut of Rivian (NASDAQ:RIVN) has brought meaningful attention to the world of electric vehicles. 

For investors then, there’s a much more relevant theme that emerged from the Twitter spat. It seems Sanders’ dismissal of billionaires struck a chord with many cryptocurrency supporters. Why? Bitcoin bulls see the leading cryptocurrency as a solution to inflation, a symptom of what they see as economic problems that go far beyond Musk’s wealth. 

Take for instance crypto influencer Natalie Brunell, who has over 90,000 followers and chimed in to hint that Bitcoin was the solution.

Cameron Winklevoss, founder of the Gemini exchange and one of the most powerful voices about Bitcoin, backed her up. 

Inflation Catalyzes Crypto Investors

So what does this all mean for investors? 

The argument that Bitcoin is a hedge against inflation is certainly not new. In fact, it largely fueled the rise of BTC to all-time highs through 2020 and into this year. However, interest in BTC and other so-called inflation hedges is picking up in recent weeks. This comes as consumer prices jump by record amounts and the Federal Reserve preps to start tapering. 

Underpinning this trend is the fact that, during the pandemic, the government pushed cash into the economy to keep things afloat. As we start to see a recovery, fears of inflation — and consumer prices — are on the rise. That’s why Bitcoin Magazine’s Jerry Goddard continues to advocate for Bitcoin as a portfolio-saving investment.

It’s an asset that also helps investors distance themselves from a government they may be struggling to trust. With rising consumer prices, some critics have even called the credibility of the Fed into question.

The Lure of Decentralization

It might seem ironic that in a debate between a billionaire CEO and a politician about taxing the rich, Bitcoin ends up as the winner. 

However, when we consider this in depth, it starts to make sense. Sanders is employing his classic ideology that taxing billionaires will provide the money that struggling Americans require as prices rise. Despite unemployment recently hitting a pandemic low due to job growth under President Joe Biden, much of the country is still under a cloud of economic pessimism. And history has taught us just how easy it is to blame politicians when constituent attitudes toward the economy are overly pessimistic, as a recent Axios podcast discussed.

Crypto supporters just see a different solution. Instead of bickering about taxes, they support Bitcoin, which InvestorPlace contributor Alex Sirois describes as a “counter” to the U.S. dollar. It’s potentially an inflation-resistant way to bypass the U.S. economy and escape the woes fueling Musk’s debate with Sanders.

Although the Fed is set to start tapering, many investors are bracing for continued inflation. While Musk and Sanders continue to debate taxes, take a closer look at Bitcoin. Some analysts estimate it will go as high as $89,000 in the year ahead, if not higher. 

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2021/11/elon-musk-tesla-stock-bernie-sanders-billionaires-bitcoin-inflation-hedge/.

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