Bitcoin is an interesting entity for many reasons, a big one being that it shares correlations with many other financial tools such as stocks and gold, but for the most part, these correlations have all been rather general. Now, it’s coming out that bitcoin shares a correlation specifically with Tesla stock, and when one looks at the evidence, it’s hard to ignore this idea.
Tesla and Bitcoin Appear to Be Connected
Bitcoin has done extremely well during the coronavirus pandemic. Yes, it’s true that the asset initially fell in price during the month of March when the pandemic came about and ravaged the world’s financial markets. However, the currency ultimately rose back to its feet over the course of two months and even crossed the $10,000 line in July, the highest it had been in nearly a year.
Bitcoin was suddenly entering five-figure territory. It can be argued that people’s ideas of the currency changed with time to reflect its status as a store of value and a potential “safe haven.” Users suddenly saw it on the same lines as gold – something that could potentially be utilized to hedge one’s wealth against inflation and other harsh economic conditions. People were losing faith in fiat currencies, and bitcoin was the world’s latest answer.
However, something else occurred during the rise of the coronavirus. While many of the world’s multiple stock shares fell in price, Tesla ultimately grew and began spiking. This was strange in that while everything around it was suffering heavily, Tesla appeared to be on an entirely different plane. Thus, bitcoin and Tesla stocks – despite the financial chaos these entities were surrounded by – experienced truly bullish conditions.
This is the first sign that the two share an uncommon bond of sorts. A correlation, if you will, that saw them both trading for new highs when the rest of the world was ravaged by monetary scars. In addition, data from Trading View – a community in which users can view trading and price information for multiple assets, including both crypto and stocks of every kind – showed Tesla stock shares as being the most viewed financial entities in the world, while bitcoin was a close second.
A Negative Side to the Equation
Both bitcoin and Tesla have become huge over the past few months. Tesla broke the $500 mark in early September, while bitcoin was hitting the $12,000 range at around the same time. These are increases of approximately 600 percent and 137 percent, respectively.
However, there is something of a catch considering that Tesla – according to MI2 Partners analyst Julian Bridgen – is beginning to show the same signs that bitcoin showed in 2017. During that time, bitcoin is considered to have been trapped in a bubble, and sadly, the next year saw the bubble popping, with the price of bitcoin falling from roughly $20,000 per unit to about $3,500 by the final months of 2018.