Tesla shares against bitcoin. Why it is more profitable to invest in cryptocurrency

BTC and Elon Musk's securities company first appeared on trading floors in July 2010. We learned from experts which of the assets to consider for purchase and the price of what may collapse the day after tomorrow

Elon Max's company Tesla in the crypto community began to call bitcoin of the stock market. The reason for this lies in the explosive growth of the cost. Shares of the electric car manufacturer were first added to the stock exchange in July 2010 at a price of $19.2. In the same month, the first cryptocurrency appeared on the trading floor, then it cost about 8 cents.

By now, both assets have become significantly more expensive. Tesla shares are now trading at $1500, rising 7,700 percent after the listing. The value of bitcoin increased by 11,500,000% during the same period and now stands at $9,200.

But this year, Musk's securities showed better dynamics than the main digital coin. Since the beginning of the year, its rate has increased by only 27%. At the same time, Tesla stock prices showed an increase of 275%. We learned from experts whether it is now worth buying shares of Tesla and BTC or, conversely, to play on the downside and which of the assets have more potential.

Tesla

Tesla's share price fell to a price high of $350 in March, then moved into a growth phase and set a new historical high of $1790 in July. Buying securities after such growth is definitely not worth it, warned Vladislav Antonov, an analyst at Alpari. According to his forecasts, a correction to $1100-1200 is possible. What is happening now resembles the rise of the bitcoin exchange rate, which happened in 2019. Then the coin from February to June rose from $3200 to $14,000, then by December it fell to $6700.

"The movement of Tesla shares is similar to the bitcoin rally in 2019. The immediate target for the drop is at $1200. And even when you reach $1200, the stock can then be adjusted to $1100. Whoever bought at the top will come out of the longs, so as not to lose, than strengthen the downward movement," Antonov suggested.

Six Nines CEO Sergey Troshin also did not recommend buying Tesla shares. He believes that the growth in the U.S. stock market ignores the economic realities, because of this possible fall. At the same time, playing on the paper is risky, it is better to stay away.

"The American stock market is monstrously overheated, the valuation of shares has come out of the real performance of companies, as pointed out by many indicators. Now investments in shares of American companies are similar to casinos - the bubble will burst sooner or later, and only the timing remains the biggest mystery. Tesla's shares shouldn't be bought or short - it has nothing to do with investing, it's gambling," Troshin said.

Fundamental indicators say that the price of Tesla is highly inflated and the shares are traded at a huge mark-up, added EXANTE managing partner Alexei Kirienko. At the same time, the company is actively developing, interest in electric cars is growing strongly, in particular, in Asia - this clearly takes investors into account in their assessments. But one way or another, the quotes of the papers can collapse sharply if the report, which will be released on July 22, will contain bad indicators.

"The lesson that the story presents with Tesla to investors is not to shorten. Now there is a lot of free money on the market, the market looks unpredictable, and earlier it cruelly punished those who did it. However, it is hardly worth buying shares either," Kirienko said.

For the same reason, the founder of the stable cryptocurrency platform Stasis Grigory Klumov did not advise to play on the downgrade of Tesla shares. He specified that Tesla predicts a very large cash flow at the interval of 20-30 years. Investors believe that the company will live for decades, bringing substantial profits, but obviously this assumption has many risks not to be realized.

"Shorting when the markets have unlimited liquidity from the central bank is an occupation that has not been statistically effective in the last 12 years since the Fed's monetary frenzy began. I wouldn't short or buy Tesla shares, it would be fun for me from the outside," Klumov said.

Bitcoin

Despite the fact that in 2020, bitcoin lost to Tesla shares in terms of profitability, it had its star hour in 2017. In January, the price of the coin began to rise from just above $1,000 and by December had soared almost 20 times, to $20,000. But the rate could not hold at this level and immediately began to decline, falling to $3200 within 12 months.

Bitcoin is a different story, Troshin continued. According to him, in 2017 the cryptocurrency was a bubble, it burst, but now the market looks quite healthy. There are many positive factors that speak in favor of the development of the new industry and its recognition in the world. In other words, there is no obvious reason to play on the decline in the value of BTC.

"The offer of bitcoin is limited, and after halving there was an additional reduction. In addition, some of the coins are lost naturally. Institutional investors and funds buy more than it is mined. Bitcoin has an infrastructure in the form of even ATMs, unlike other cryptocurrencies. It makes derivatives, leaf on crypto-exchanges. It's definitely not worth shorting bitcoin now," Troshin said.

Kirienko agreed with him. He also stressed that the position of Tesla and bitcoin is different and the latter has a "moderate" potential for long-term growth. It can be provided by halving and the influx of new investors.

"The situation with bitcoin is very different. Paradoxically, the "volatile" BTC is now stable. After halving miners are not ready to sell bitcoin at prices below $6-8 thousand, but buyers (including institutional investors) at such prices quite a lot. BTC has a moderate growth potential, and if you are not a short-term trader, the asset should be considered for purchase, not for shorts," Kirienko said.

He noted that since the beginning of the year bitcoin has become much more expensive than many altcoins. Some market participants believe that soon there will be an explosive growth of the crypto market, as it happened in 2013 and 2017, but so far the quotes of the flagship of the market do not look like a bubble.

Antonov agreed that the cryptocurrency market at the moment has no signs of a bubble. In the case of Tesla shares, on the contrary, these signs are there. Therefore, the price of securities is unlikely to rise if, for example, the stock market starts to stagnate or a new fall. However, the BTC rate is also independent, and its behavior depends on the index of the S'amp;P 500.

"Bitcoin is in a sideways trend. No one knows where the exit will be. It's tied to the S'amp;P 500. If the S'amp;P 500 makes its way to 3400, bitcoin will rise to $10,000. And now it's very boring. The rally on it may be after July 25," Antonov predicted.

Klumov added that bitcoin has an important advantage over Tesla shares - it is impossible to increase its emission. In the case of securities, the situation is the opposite. The company can conduct their additional release to balance the cost of financing to market level.

"The shares are theoretically endless: with the rise in the share price, the value of the company's financing falls... Therefore, with the growth of shares to certain levels, when the cost of capital for the company decreases significantly, the company can always issue additional issuance and issue any number of shares to bring the value of its financing to market level. Roughly speaking, the increase in the value of shares understates the cost of financing the company relative to the market rate," Klumov explained.

He stressed that such a situation is impossible with the rise in the price of bitcoin. No one can "print" it or create new coins to monetize the price of an asset. This can only be done by selling what you have, as well as producing BTC through primary mining. After halving, this process became extremely energy-intensive.

Bitcoin has lost now, but may win in the future

Most experts agreed that buying Tesla shares is now extremely risky. The company's papers are overvalued and resemble a bubble, there is a risk of additional emissions and, most importantly, on Wednesday will be a report for the second quarter, which may contain poor performance.

Despite the fact that the first cryptocurrency this year lagged behind in terms of profitability, at the moment it looks more attractive for investment than Tesla shares, experts believe. Bitcoin compared to 2017 shows no signs of a bubble and has a moderate potential for long-term price increase.