Tesla (TSLA) buys bitcoin, testing record highs: Could $1,000 be next?
Matt Weller, CFA, CMT February 8, 2021 9:12 AM
The firm’s foray into accepting the digital currency as payment for its vehicles will be attractive to a new subgroup of increasingly wealthy potential customers: crypto investors
“Don’t tell me what you think, tell me what you have in your portfolio.” – Nassim Nicholas Taleb
After spending most of the weekend (jokingly?) extolling the virtues of the meme currency Dogecoin on twitter, the planet’s richest man made more significant crypto-related news this morning when an SEC filing showed that Elon Musk’s Tesla Motors (TSLA) purchased $1.5B in Bitcoin in January. Moreover, the filing went on to note that the company expects “to begin accepting bitcoin as a form of payment for our products in the near future…which we may or may not liquidate upon receipt.”
The news served as rocket fuel for the entire cryptoasset asset class, with Bitcoin surging to a record high above $44,000 as of writing, but the bigger implications may be for Tesla itself.
As we go to press, the highly-traded stock is trading up by nearly 3% pre-market to test a record high of its own. Previous companies that have added Bitcoin to their corporate treasuries have surged in recent months (Microstrategy’s 600% rally in the last six months being the most prominent example), though it will take far more than the current allocation for Bitcoin’s price to be a meaningful contribution to TSLA’s stock movements.
At a minimum, the firm’s foray into accepting the digital currency as payment for its vehicles will be attractive to a new subgroup of increasingly wealthy potential customers (crypto investors) and shows that Musk and company remain on the cutting edge of innovation.
TSLA technical analysis
As noted earlier, TSLA is back testing its record highs from last month near $900 following today’s news. The five-week consolidation below $900 has alleviated the overbought condition in the RSI indicator, potentially clearing the way for another leg higher as we move through February. As long as TSLA is holding above its short-term 21- and 50-day exponential moving averages, traders will continue to give the bullish trend in Elon Musk’s behemoth the benefit of the doubt:
Source: TradingView, GAIN Capital
As a final note, if TSLA is able to break out above $900 in the current narrative- and meme-driven environment, traders could quickly set their eyes on the psychologically-significant $1,000 level as a logical target. For a company that was trading in two-digit territory (<$100 per share) less than a year ago, a move to quadruple-digit territory (>$1,000) would quite impressive indeed!
Learn more about equity trading opportunities.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.