Daniel Ives, a Wedbush analyst, believes that Tesla has a direct connection with bitcoin (BTC), according to a report from CNBC. The statement follows Tesla’s billion-dollar investment whereby the electronic vehicle company purchased BTC worth $1.5 billion.
Several investors have since acquired BTC as part of their portfolio. Even though Tesla CEO Elon Musk’s loyalty seems to align with Dogecoin (DOGE), he has been tweeting about other cryptos as well, including BTC and Ethereum (ETH).
According to Daniel, Tesla has already profited roughly $1 billion since its bitcoin purchase. Despite having realized profits, both Tesla and BTC face their fair share of risks, particularly at the start of this week (Feb 22).
Considering the volatility of BTC, some view the decision as a bad idea considering the plunge it has faced.
The Correlation
On Monday, Feb 22, Tesla’s stock dropped 8.5% to $697.00, with more analysts pointing fingers towards bitcoin as the causative agent. This is the lowest Tesla has treaded since September 2020.
The drop also follows Musk’s replies to Peter Schiff, calling out the Tesla CEO for labeling both fiat and bitcoin as “BS.” In his opinion, Musk considers talking about gold and owning it as two different things.
Musk later commented that both ETH and BTC “seem high.” Some suspect this led to the coin dropping to $46,000 before correcting higher to $54,000.
Nonetheless, the market is still in turmoil as BTC currently trades around $48,700 on Coinbase. Today’s (Feb 23) price drop is attributed to US Treasury Secretary Janet Yellen’s warning to investors calling it an inefficient path to take when conducting transactions.
On the other hand, some analysts argue that the best move for most companies is to hedge BTC and reduce risks on their equity. Ives further commented that Tesla’s success is more tied to its electric vehicles as opposed to bitcoin.
Elon Musk’s Engagement With BTC
Elon is highly vocal when it comes to the crypto-verse, especially after his bitcoin investment.
The Tesla CEO recently urged major Dogecoin holders to sell their meme coins as a way of circulating more of it to the crypto market.
Furthermore, Elon’s Twitter has regularly promoted DOGE, more recently submitting a meme with rapper Snoop Dogg in the picture. During that time, DOGE spiked from $0.056 to $0.0872 within a day.