Bitcoin is an interesting product for many reasons, one of the main ones being that it has correlations with many other financial instruments such as stocks and gold but, for the most part, these correlations have all been quite generic. Now, it is emerging that bitcoin may share a correlation specifically with Tesla shares, and when you look at the evidence, it's hard to ignore this idea.
Tesla and Bitcoin appear to be connected
Bitcoin held up very well during the coronavirus pandemic. Yes, it is true that the asset initially fell in price during the month of March, when the pandemic that devastated the world financial markets exploded.
The cryptocurrency eventually recovered within two months and even crossed the $ 10.000 mark in July, the highest in nearly a year. It seems that the ideas circulating about cryptocurrency have changed over time, giving bitcoin a status of store of value and potential “safe haven”.
Users suddenly saw it on the same level as gold, as something that could potentially be used to protect their wealth from inflation and other severe economic crises.
People were losing faith in fiat currencies and bitcoin was the last possible answer. In addition to this, something else has also happened as the coronavirus pandemic progresses. While many of the shares have fallen in price, Tesla has risen and started to rise.
Tesla appeared to be on a completely different plane from the rest of the shares in global markets. Bitcoin and Tesla, despite the financial chaos they were surrounded by, have experienced truly bullish conditions.
This is the first sign that the two share some sort of unusual bond. A correlation that saw them both reach new highs while the rest of the world was devastated by the crisis.
Additionally, data from Trading View, a community where users can view information on trading and pricing of different assets, including both cryptocurrencies and stocks of all kinds, showed that Tesla shares are the most viewed financial asset in the world. , while bitcoin is very close to this position.
A negative aspect in the correlation
Both bitcoin and Tesla have gotten huge in recent months. Tesla broke the $ 500 mark in early September, while bitcoin was hitting the $ 12.000 line around the same time. These are increases of approximately 600% and 137% respectively.
However, there is a downside to all of this. Tesla - according to MI2 Partners analyst Julian Bridgen - is starting to show the same signs that bitcoin showed in 2017. During that stage, bitcoin is believed to have been trapped in a bubble, and sadly, the following year that bubble is erupted, with the price of bitcoin falling from around $ 20.000 to around $ 3.500 in the last few months of 2018.
