Gundlachs comments are another sign the investment case for Bitcoin is winning over institutional money managers and possibly siphoning cash from the gold market.
Following Teslas disclosure, bitcoin surged 20 per cent to hit fresh highs of $47,000. It also put extra pressure on exchanges in India and abroad who faced some difficulty in processing orders as investors rushed to buy bitcoin.
Tesla founder and CEO Elon Musk, who also helped launch PayPal, has expressed enthusiasm about cryptocurrencies online and industry sources say he has the technological expertise to build the required infrastructure.
NEW DELHI: Ever since global markets started rebounding from their March lows, the prices of Tesla stock and Bitcoin have defied gravity as well as valuation metrics. Former Reserve Bank of India (RBI) Governor and eminent economist Raghuram Rajan says the cryptocurrency is nothing but a classic case of bubble, while the momentum in the Tesla stock is being driven partly by hordes of small investors.
“Temporary low performance is being ignored in favour of the idea that we are going to get a strong rebound and things are going to look good going forward. Low interest rates in the near term do not matter relative to the long term. Those are the calculations the market is making. There is, of course, the froth that small investors induced in the markets and this is where things like Bitcoin, Tesla have got priced up, because people are just jumping in,” Rajan said in an interview with ETNow.