At least that's what Daniel Ives, an analyst at Wedbush, says. Elon Musk and Tesla are so tied to the story and fate of Bitcoin, the EV maker and the cryptocurrency are nearly inseparable. Tesla's fall last night and this morning and subsequent rise as we approach 12 p.m. EST--following Bitcoin's fall and rise to a tee--brings the point home.
“Although Tesla made a billion paper profit in its first month owning the digital gold, it comes with added risk, as seen this week,” Ives told CNBC via email on Tuesday.
“Musk is now tied to the bitcoin story in the eyes of the Street and although Tesla made a billion paper profit in its first month owning the digital gold, it comes with added risk, as seen this week,” Ives said.
Musk's Tesla bought about $1.5 billion in Bitcoin in January and expects to start accepting it as a payment in the future.
Tesla’s share price is now directly linked to the price of Bitcoin after such a massive investment.
Shares of Tesla fell more than 11% when the market opened on Tuesday, its biggest drop since Sept. 23, 2020. Bitcoin has also had a rollercoaster of a week.
A warning by U.S. Treasury Secretary Janet Yellen about the cryptocurrency further drove down the most popular cryptocurrency,
Wedbush is still bullish on Tesla despite the recent dips.
“We believe Tesla will hit a one trillion market cap over the coming months through its EV growth and not through bitcoin,” Ives said. Ives pointed to the growth of EV adoption in China as Tesla's gateway to continuing growth.
While Bitcoin--and to some degree Tesla--has been driven more by enthusiasm than anythign else, Bitcoin's surge was also driven by its aceptance as a digital form of payment, something akin to gold as an asset class. Bitcoin owes its growing legitimation as an asset class more to Musk than anyone else, but other companies are following suit.
Tesla and Bitcoin may not be the same thing (or even the same trade), but the fate of the car company and the cryptocurrency's fate are inexorably intertwined.