Tesla stock is becoming more and more uncorrelated with the stock market. That could be due to Bitcoin.
Shares in the world’s largest automaker are less and less correlated with other technology stocks. Accordingly, the correlation with the Nasdaq 100 has fallen to 0.14 on a 20-day average. For comparison: on June 17th it was still 0.83 – a drop of 83 percent within one month. If the correlation coefficient is 0, there is no statistical relationship; if the correlation coefficient is 1, both assets move in tandem.
A decreasing correlation can also be reported with the so-called FANG shares (Facebook, Amazon, Netflix and Google). That reports Bloomberg with reference to the relevant statistics. The analyst Amy Wu Silverman of RBC Capital Markets sees the reason for the decoupling with Bitcoin.
Tesla is highly correlated with tech companies. But that relationship has really broken apart. If I ask around the feedback I get is that this is related to their Bitcoin exposure and how it needs to be taken into account when they report profits.
Amy Wu Silverman to Bloomberg
Both Tesla (ISIN: US88160R1014) and the Nasdaq 100 are riding the current bull wave on the US capital market. After all, Tesla is listed eight and the Nasdaq 100 around five percent up.
Tesla’s relationship with Bitcoin is twofold
The Californian electric car manufacturer has been investing in BTC since February of this year. Back then, much to the delight of the crypto community, Tesla had invested a total of 1.5 billion US dollars from its cash reserves in digital gold. Tesla has since sold around ten percent of its holdings (around USD 101 million) – they wanted to test how liquid the Bitcoin market is, according to Tesla.
Elon Musk has also fallen out of favor more than a little since then. Due to ESG concerns related to Bitcoin mining, Tesla has temporarily suspended the acceptance of BTC for its products. Negative comments from the CEO then triggered a chain reaction in the crypto market, which maneuvered the Bitcoin price by over 50 percent compared to its all-time high in April this year by 50 percent.
Many market observers had expected further market entries by well-known US companies in the Bitcoin market as a result of the Tesla commitment. With the exception of the usual suspects such as NYDIG and MicroStrategy, no real big player is known to date who has exchanged a significant part of its USD holdings for BTC.