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Tesla’s stock price has barely moved after CEO and founder Elon Musk announced that the world’s largest electric automobile company has bought $1.5 billion worth of Bitcoin as part of its investment strategy.
Musk had been teasing the big announcement for weeks and notably put Bitcoin on his Twitter page and continued to underscore the benefit of cryptos and mentioned Dogecoin during numerous Tweets.
Investors and traders have clearly been weighing up the implications of this move and digesting the details of Tesla aggressive foray into the cryptocurrency market. Elon Musk also announced that he will also be selling Tesla cars in Bitcoin in the future.
Clearly Musk is betting that wider mainstream adoption will cause Bitcoin holders to buy Tesla is with their recent profits, and indeed that the price of Bitcoin will continue to rise and outpace the US dollar and other currencies.
Those seeking to invest in Tesla now have to consider that the prospects of the company are linked to the health of the Bitcoin. And if Bitcoin were to stage a significant correction It could negatively affect Tesla’s stock price.
It is interesting that Tesla’s stock price did not rise on Monday’s news, while the price of Bitcoin rallied by close to twenty percent shortly after the announcement. I suspect that the true market reaction may be seen shortly.
The stock price of Tesla could receive a significant boost if other companies start to make similar bets on Bitcoin. This would not only cause the price of Bitcoin to rise, but probably cause Tesla’s stock price to rise also.
Other considerations when looking to Tesla’s stock price will be clearer guidance over cryptocurrency regulations and also the decisions on the recent Bitcoin ETF filling. A Bitcoin ETF would be a huge deal for the market.
Tesla Short-term Technical Analysis
The four-hour time frame shows that Tesla’s stock price is trading within a large broadening wedge pattern. The pattern in question is currently located between the $920.00 and $760.00 levels.
Typically, these types of patterns indicate that a stock is going to trade within an extremely large trading range before the inevitable breakout takes place.
Source by ActivTrader.
I suspect that bulls are going to attempt to test towards the $1,000 eventually, however, it remains to be seen if Tesla’s stock price tests the bottom of the wedge pattern first.
Tesla Medium-term Technical Analysis
According to the daily time frame Tesla’s stock price is trading at a critical juncture, hence the overall indecision towards the world’s leading electric automobile maker in the near-term.
Technical analysis shows that Tesla’s share price is trapped within a rising price channel between the $840.00 and $1,000 level. If bulls continue to defend the bottom of the price channel, watch out for a coming rally.
Source by ActivTrader.
Failure under the rising price channel and Tesla’s share price could fall towards the $800.00 to $750.00 price areas. The RSI indicator on the daily time frame shows that Tesla’s stock price is not current overbought. Again, a push towards the $1,000 level seems possible over the medium-term.
