Bitcoin And Tesla Are Absolutely Nothing Alike – Forbes

Tesla's massive rally this week has provoked a flood of comparisons to bitcoin's epic 2017 price surge.

Tesla's stock price has doubled since the beginning of the year and either very brave or very foolish investors are saying it could double again over the next few days after one particularly bullish investor predicted the stock could rise more than seven-fold by 2024.

The bitcoin price is often compared to company shares in a way that no other currency or commodity is. But it shouldn't bestock prices are based on the promise of future investor returns. Bitcoin promises buyers nothing.

Tesla CEO Elon Musk has previously praised bitcoin but he is unconvinced it is a sound investment.

Last week, the bitcoin-Tesla comparison was made by GLJ Researchs Gordon Johnson, who branded Tesla's stock market surge "effectively bitcoin on wheels," when speaking to Fox Business.

"We think this is a bubble," Johnson said. "We think a lot of people are scared to miss the upside," suggesting so-called fear of missing out (FOMO) is driving the Tesla share price higher and pointing to elusive profits and unreliable demand from China.

Bitcoin's 2017 bull run, which saw the bitcoin price surge from under $1,000 at the beginning of the year to almost $20,000 by December, was powered by FOMO on a global scaleand resulted in bitcoin's subsequent near-90% crash.

Analysis of how both bitcoin and Tesla have performed during in their respective bull runs shows other similarities.

The speed of Teslas recent rally exceeds bitcoin's at its peak, financial newswire Bloomberg reported yesterday, after it found Tesla's 14-day relative strength index, a gauge of the magnitude and persistence of price movements, topped bitcoin's in December 2017.

"Tesla at its current price is effectively the same as bitcoin at its all-time high in 2017," crypto trader Scott Melker said via Twitter, commenting on a bitcoin-Tesla price comparison chart shared by Mike Novogratz, the former billionaire hedge fund manager and chief executive of bitcoin and cryptocurrency investment company Galaxy Digital.

These cosmetic comparisons are where the similarities end, however.

Last week, Tesla reported earnings beyond Wall Street expectations, posting its second consecutive quarter of profitability and forecasting it should remain profitable.

This week, the market was set alight by analysts at Argus Research who raised their price target for Tesla from $556 to $808 and by Tesla cheerleaders at Ark Investment Management who believe the stock could be worth upwards of $7,000 per share by 2024calls based on market research and potential future returns.

"Despite past production delays, parts shortages, labor cost overruns and other difficulties, we expect Tesla to benefit from its dominant position in the electric vehicle industry and to improve performance in 2020 and beyond," Argus Research said in its note on Monday.

Many, meanwhile expect bitcoin to make the same kind of rises Argus and Ark have predicted for Teslabased only the expectation demand for bitcoin will rise.

One U.S. wealth manager has recently said he expects the bitcoin price to soar by almost 50-fold over the next ten years, meaning he thinks one bitcoin will be worth a staggering $400,000 by 2030giving bitcoin a market capitalization of around $8 trillion.

However, during this time bitcoin will give the market no updates, will pay no dividends and can promise no profitabilityit could, and very well might, be replaced by a superior technology.

Buying Tesla stock right now might be like buying bitcoin in December 2017 but the valuations given to even surging stock like Tesla are based on something more solid.

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Bitcoin And Tesla Are Absolutely Nothing Alike - Forbes