Billionaire Elon Musk has been addressing investors around the world to urge everyone not to use leverage as financial markets are going through a period of global instability.
While the advice was more for stock investors and not so much for cryptocurrencies, the rule could have applications in this market.
In recent days, well-known investor Michael Burry sent a sell alert to the market, drawing attention to a possible financial crisis.
Elon Musk craves investors: “Avoid leverage in turbulent times”
An atypical scene was noticed by followers of Elon Musk on his social network Twitter. Without much background as a financial advisor, the billionaire decided to give tips to the investors who follow him.
However, the hint came after the FED hiked interest rates last Wednesday (1st), signaling some fear in the market to keep dollar inflation in check.
According to Elon Musk, investors should remain alert to worrying signals from the global economy while avoiding leveraged positions in the markets.
“In turbulent economic times, be careful about using margin lending to buy stocks.”
In turbulent economic times, be careful about using margin loans to buy stocks
— Elon Musk (@elonmusk) February 2, 2023
The new unusual tip from Elon Musk had already been given in the past by Warren Buffett, who always argued against the use of leverage in the financial market.
Could the stock market crisis affect bitcoin?
This Friday (3), the price of bitcoin fell 1.95% on the global market, a retreat following similar scenarios on exchanges. As a result, it is still quoted at US$23,300.00.
In Brazil, for example, the IBOVESPA fell by 1.62% on the same date and positioned itself at 108 thousand points. Major commodities traded in times of crisis, even gold in some markets held no resistance, registering a 2.7% drop this Friday, according to data from Yahoo Finance.
In the US, another strong financial market, the major stock markets reacted negatively. The DOW Jones remains down 0.47%, the Nasdaq down 1.59% and the S&P500 down 1.08% on Friday.
However, in recent months, bitcoin has taken off from major US indices, according to data collected by Livecoins on Google Finance. So it is unclear whether bitcoin could react negatively in a bearish global stock market scenario.
It is worth remembering that Elon Musk is an investor in both bitcoin and other cryptocurrencies, in addition to the stock market itself. That’s why he has tried to limit the risks of his operations and decided to share the new tip with his millions of followers.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
