Tesla‘s share price (TSLA) exceeded $1,200 in pre-market, reaching a market capitalization of more than $220 billion. Today, the world’s most valuable automotive company is worth 30% more than the total market capitalization of Bitcoin (BTC), the world’s largest and most popular cryptographic currency

Tesla has overtaken Toyota to become the most valued automaker in the global market. It is now looking to establish its dominance in the sector as its stock continues to soar.

Tesla’s share price exceeded $1,200 in the pre-market. Source: CNBC

The catalysts driving Tesla’s stock and its relationship with Bitcoin

According to Nasdaq stock market data, Tesla officially reached $1,214 with an 8.5% increase in share price. Analysts attribute Tesla’s upward trend to expectations of strong second quarter sales

Elon Musk, Tesla’s CEO, expressed surprise at the company’s execution. He told employees in an email:

“It’s amazing the quality of your execution, especially in these difficult times. I’m so proud to work with you!”

Musk’s positive sentiment around the second quarter led analysts to be optimistic about a potentially profitable quarter. Electrek, an energy-focused publication, estimated that Tesla could have delivered more than 90,000 cars in the second quarter.

Following Tesla’s rally, Wedbush analyst Dan Ives said he now expects Tesla’s share price to reach $2,000 in the long term. Ives said in a note:

“We believe that with stronger than expected demand for the Model 3 in China as the summer approaches, the easing of lock-in in the US and Europe, and some potentially game-changing battery developments on the horizon, Tesla’s stock probably has room to go further

Other large stocks such as Apple and Microsoft have maintained their momentum in recent months, buoyed by optimism in the U.S. stock market.

While Tesla and Bitcoin have no price correlation and no similarities, Tesla’s valuation shows two things about the first cryptocrown

First of all, Bitcoin is still in an extremely early growth phase and as such has great potential for further development. Secondly, the upward trend in equities, despite obvious geopolitical and macroeconomic risks, could have a positive effect on risk assets in the third quarter.

A feeling similar to BTC’s in 2019

Throughout the first half of 2020, Tesla consistently ranked among the shortest stocks in the United States. According to data from the Nasdaq stock exchange, it remains a highly short-circuited stock to this day.

Most viewed stocks in Nasdaq’s short interest list

The most accessed stocks on the Nasdaq’s short list. Source: Nasdaq

Similarly, when the price of bitcoin rose massively in 2019, it was mainly triggered by a tightening of short-term contracts. In July 2019, for example, BTC went from about $6,000 to $14,000 in the space of a few months. It was heavily short-circuited on BitMEX, and as BTC progressed, it liquidated many short contracts.

The Tesla action presents a FOMO rally like Bitcoin did in previous years. As the TSLA surpasses its record price, the chances of price discovery increase as it ventures into uncharted territory.

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2020-07-02