Is There Any Truth to the Tesla-Bitcoin Parallels?

by
Will Heasman
My articles My books
Follow on:

• Is there a bitcoin-Tesla connection?
• Are BTC and Tesla truly the world’s most “disruptive” technologies?
• Blockchain, not bitcoin.

Thanks to a significant uptick in Tesla (NASDAQ:TSLA) stock since the start of 2020, a new narrative has emerged: Tesla stock is—apparently—the new bitcoin. But is there any truth to this beyond a trivial analytic link?

The chronicle of Tesla’s price surge—and its kinship to BTC—is being picked apart by nearly every analyst of late. One of the most recent speculators to highlight the quasi-relationship is Bloomberg Intelligence analyst Mike McGlone.

Speaking on an episode of “Charting Futures,” McGlone observed that Tesla’s stock price seems to be mimicking its 2013 performance—a year that witnessed TSLA explode from $32 to $190 in the space of nine months:

On the long-term chart, [TSLA] trades just like it did in 2013, which was one of the biggest years ever. And by the way, that was the biggest year ever for Bitcoin and it looks to me like you’re seeing a little bit of Bitcoin catching up.

Bitcoin and Tesla: “The world’s most significant disruptive technologies”

McGlone certainly isn’t alone in his thinking. A variety of crypto (and some non-crypto) commentators have also noted the TSLA-BTC connection. Crypto trader Scott Melker even suggested that Tesla stock was imitating bitcoin’s infamous 2017 bull run—prompting somewhat of a sell signal:

You can’t blame people for drawing comparisons. TSLA has gone on a parabolic streak since late October, climbing from $254 to a peak of $887 in early February. That marks a massive 250% increase in a little over three months. Remind you of anything?

Given this integral turning point for Tesla, it’s understandable why many are making the bitcoin-Tesla connection.

According to McGlone, while the assets’ charts appear to be lining up, the primary correlation between the pair remains their “disruptive” nature:

They’re different assets but they’re the world’s most significant disruptive technologies with name recognition all around the world.

Tesla Still Has the Potential for Disruption

McGlone is right. Tesla is an undoubtedly innovative company. Its intention to supersede outmoded gas guzzlers makes it a highly relevant disruptor, especially in the age of environmental awareness.

Rather than cornering the market, as disruptive innovations typically do—often by producing a cheap and effective product—Tesla’s success has instead drawn in multiple competitors. For example, the Chevrolet Bolt, Hyundai Ioniq, and Nissan Leaf, among others, come in at a more palatable cost compared to the Tesla Model 3, with its lofty $39,490 price tag.

Nevertheless, there is unquestionably a demand for Tesla. Last year the firm managing to seize 16% of the electric vehicle market despite established competition.

As a world-renowned pioneer of the electric vehicle industry, Tesla’s demand will likely continue to grow.

Has Bitcoin Lost Its Disrupt Factor?

And then there’s bitcoin.

Once touted as the death knell for the traditional financial industry, bitcoin’s allure as a disruptor has all but dissipated in recent years. Despite being a pioneer of blockchain technology and digital payments, a deficiency in adoption has curbed bitcoin’s goal of financial dominance.

For the most part, Bitcoin losing its disruptor status arises from a trifecta of woes: regulation, innovation and categorization.

A lack of cohesive regulation has left BTC adoption staggered across multiple jurisdictions. In the U.S., while the SEC continues to debate over security classifications of specific cryptocurrencies, the IRS defines bitcoin as “property for U.S. federal tax purposes,” and the CFTC considers digital assets commodities. All of which contribute to the confusion.  

Constant disagreement as to its use case has similarly buckled bitcoin—with no real consensus as to whether it’s a store of value, a medium of exchange, or both. As a consequence, the markets have become saturated. The cryptocurrency markets are now chock-full of bitcoin derivatives, each touting a sounder use-case than the last—providing further dilution in bitcoin’s mission toward disruption.

Blockchain, Not Bitcoin

Perhaps most damning of all is the argument that blockchain is a better disruptor than bitcoin.

“Bitcoin, not blockchain” is an adage typically used by non-believers. From Goldman Sachs President Gary Cohn to U.S. defense agency DARPA, those who rank BTC lower than its underlying tech appear to be winning the debate. 

Last April, Forbes released its “Blockchain 50” list—a round-up for billion-dollar companies employing blockchain tech. The list included big shots such as Amazon Web Services, BBVA (Spain’s second-largest bank), Citigroup and, of course, Facebook. All of which tend to turn a blind eye toward bitcoin itself.

At the end of it, despite what analysts say, bitcoin’s relationship with Tesla is negligible at best, and downright ridiculous at worst.

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.