Julian Bridgen, a cofounder and partner of M12 partners has compared the stock of Tesla to Bitcoin in 2017, when the digital currency hit an all-time-high of $20,000. According to Bridgen, the weekly chart of Bitcoin in 2017 is very similar to what Tesla’s daily chart looks like. He added that it could be a sign that Tesla (TSLA) is another bubble.
Bitcoin dropped 58% in 2 months in 2017 after reaching its peak value in December 2017. The Tesla stock has in recent weeks lost more 33.74% pointing to wavering investor confidence. Even though the stock of the car maker has shown signs of recovery in the past 48 hours, Bridgen maintained that there are remarkable similarities between the two investment instruments.
With a 12.46% recovery, it would seem that Tesla stock is showing no sign of long-term pull-back despite the assertion by Bridgen:
“What defines a bubble? A great story is essential. In fact, the better the story the bigger the bubble. Then lots of liquidity and finally a classic bubble chart. For example, #bitcoin in 2017. In TSLA we have all three.”
Even though these similarities exist, what Bridgen seemed to overlook is the fact that Tesla is a publicly quoted company whose stock performance is dependent on the company’s results, while Bitcoin is used mainly as a store of value and an instrument for transferring the same.
Bitcoin since 2017 rally has wavered between $6000 and $10,000. The coin recently rallied above $12,000 and has recently shown capacity of stabilizing above the $10,000 resistance point.
Being seen and used as a store of value or digital gold can be exemplified by the recent investment of MicroStrategy in the asset. The company purchased BTC worth $250 million on August 11, effectively passing the message that it is adopting Bitcoin as its primary treasury asset.
What is obvious is that Tesla stock is influenced more by fundamental factors instead of technical despite the claims of Bridgen, for instance, Credit Suisse analyst, Dan Levy said that three main factors would influence the company’s stock’s recovery: inclusion as S&P500, stock split and battery technology. How these would work out for investment remains to be seen.