Julian Bridgen, Co-founder of the macroeconomic research company, MI2 partner, believe Tesla (TSLA) shares are showing signs of a bubble. It compared the stocks of Bitcoin (BTC) in 2017 when it hit $ 20,000 and it fell 58% in two months.
From the annual maximum to the minimum of the month, The price of TSLA fell 33.74%. The stock has rallied in the past 48 hours, posting a whopping 12.46% percentage.
Similar breakdown between Tesla stock price chart and Bitcoin price chart
Bridgen shared a Tesla stock chart with a fractal of the Bitcoin weekly chart from 2016 to 2019. It showed some of the technical similarities between the two charts and explained::
What is a bubble? A great story is important. The better the story, the bigger the bubble. Then a lot of liquidity and finally a classic bubble chart. For example #bitcoin in 2017. At TSLA we have all three “.
Tesla share price chart with Bitcoin weekly chart. Source: Julian Bridgen
While there are similarities between the Tesla and Bitcoin charts, there are some key differences. First, The chart compares the daily chart for Tesla shares with the weekly chart for BTC. Secondly, As a public company, Tesla is fundamentally different from Bitcoin, a digital peer-to-peer network.
Also, Bitcoin is increasingly viewed as a store of value, often referred to as “digital gold”. Investors, both institutions and individuals, use BTC as a means of storing and transferring value. For example, MicroStrategy bought Bitcoin on August 11th, valued at $ 250 million, and took it over as a main part of the company.
In contrast, Tesla is the world’s most valuable automaker, whose share price depends heavily on the company’s performance.
Although there may be technical similarities between the Bitcoin and Tesla charts, especially since the correlation between BTC and stocks hit new highs this summer, Fundamental factors are likely to affect TSLA shares more than technical ones.
In the short term, analysts say Tesla has three main catalysts that could add to the stock rally. The analyst of Credit Suisse, Dan levydescribed the three factors like the inclusion of the SP 500, Battery Technology Day and the stock split.
Battery Technology Day is expected to take place in Tesla on September 22nd. Analysts expect Tesla to announce a more powerful and longer-lasting battery technology.
Variables like the introduction of new technology and the mid-term inclusion of the SP 500 of Tesla shares could lead to the stock’s rebound.
At the same time, some analysts have predicted that listing on the SP 500 could pose significant challenges simply because of Tesla’s size. Levy said on September 2nd:
“Of course, there is no guarantee that Tesla will be included in the next expansion as it is difficult to add a company the size of Tesla.”
Such as, One could argue that the retreat in Tesla shares was expected and that it was magnified by the recent Nasdaq crash.
What are analysts saying about the long-term outlook for BTC?
The late 2017 bitcoin chart is widely used for comparison with other charts that show vertical rallies.
From the first period up to $ 20,000, BTC has mainly consolidated between $ 6,000 and $ 10,000 in higher periods. Recently, It briefly crossed the $ 12,000 resistance level and is now showing strength in its ability to stay above $ 10,000.
Some investors, including the CEO of Three arrows capital, Su Zhu, they said who was surprised by the stability of BTC over $ 10,000This is optimistic with regard to macroeconomic price developments.