Is Bitcoin To Blame? Tesla Stock Suffers Biggest Plunge Since September 2020

KEY POINTS

  • Tesla stock decreased by 8.5%, which coincided with a drop in the price of Bitcoin
  • Musk’s tweets always have an effect on the crypto market
  • The billionaire recently tweeted that the price of Bitcoin and Ethereum “seem” high

Tesla’s share price dropped to $714.50 Monday, an 8.5% decrease from the previous day. Critics attribute the loss to its billionaire CEO’s comments about Bitcoin.

The drop in Tesla’s share price coincided with a recent comment from Elon Musk, who tweeted that the price of Bitcoin and Ethereum “seem” high, CNBC reported.

After Musk’s tweet, Bitcoin dropped sharply Monday, decreasing to as low as $46,600 on Coinbase before closing at $54,058. At the time of this writing, the dominant cryptocurrency’s price is trading around $48,000 per BTC.

Tesla’s price closed at $714.50 Monday, its lowest since Sept. 23, 2020. There have been reports suggesting a correlation between the price of Tesla and Bitcoin. This is attributed to the similarities between the dominant cryptocurrency and the S&P 500. Data from TradingView showed that millennials were actively trading both Bitcoin and Tesla stocks. Both prices also trended downward on Sept. 1 last year when Tesla fell to $330 and Bitcoin went from $12,000 to $10,160. 

In a recent filing with the Securities and Exchange Commission, Tesla revealed it purchased $1.5 billion worth of Bitcoin. The company said this was to have more flexibility and to be able to maximize its cash returns. Bitcoin’s price, which was expected to trade below $40,000 for the next few days, shot up to $44,000 following this.

Musk’s recent remarks about cryptocurrencies came after he stated that an email saying that a person has gold is different from actually having gold. “You might as well have crypto,” he added. Some cryptocurrency personalities on Twitter chimed in. Changpeng ‘CZ’ Zhao, the owner of Binance Exchange, remarked that Musk had said the same thing before Tesla’s stock went through the roof. 

“We should consider taking Bitcoin private at $420,000,” Monero lead Riccardo Spagni joked, referring to a previous comment from Musk.

Tech entrepreneur Elon Musk's planned Tesla factory is the next vast construction site outside Berlin Tech entrepreneur Elon Musk’s planned Tesla factory is the next vast construction site outside Berlin Photo: AFP / Odd ANDERSEN

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