Tesla (TSLA) buys bitcoin, testing record highs: Could $1,000 be next?

The firm’s foray into accepting the digital currency as payment for its vehicles will be attractive to a new subgroup of increasingly wealthy potential customers: crypto investors

Tech (1)

“Don’t tell me what you think, tell me what you have in your portfolio.” – Nassim Nicholas Taleb

After spending most of the weekend (jokingly?) extolling the virtues of the meme currency Dogecoin on twitter, the planet’s richest man made more significant crypto-related news this morning when an SEC filing showed that Elon Musk’s Tesla Motors (TSLA) purchased $1.5B in Bitcoin in January. Moreover, the filing went on to note that the company expects “to begin accepting bitcoin as a form of payment for our products in the near future…which we may or may not liquidate upon receipt.”

The news served as rocket fuel for the entire cryptoasset asset class, with Bitcoin surging to a record high above $44,000 as of writing, but the bigger implications may be for Tesla itself.

As we go to press, the highly-traded stock is trading up by nearly 3% pre-market to test a record high of its own. Previous companies that have added Bitcoin to their corporate treasuries have surged in recent months (Microstrategy’s 600% rally in the last six months being the most prominent example), though it will take far more than the current allocation for Bitcoin’s price to be a meaningful contribution to TSLA’s stock movements.

At a minimum, the firm’s foray into accepting the digital currency as payment for its vehicles will be attractive to a new subgroup of increasingly wealthy potential customers (crypto investors) and shows that Musk and company remain on the cutting edge of innovation.

TSLA technical analysis

As noted earlier, TSLA is back testing its record highs from last month near $900 following today’s news. The five-week consolidation below $900 has alleviated the overbought condition in the RSI indicator, potentially clearing the way for another leg higher as we move through February. As long as TSLA is holding above its short-term 21- and 50-day exponential moving averages, traders will continue to give the bullish trend in Elon Musk’s behemoth the benefit of the doubt:

Source: TradingView, GAIN Capital

As a final note, if TSLA is able to break out above $900 in the current narrative- and meme-driven environment, traders could quickly set their eyes on the psychologically-significant $1,000 level as a logical target. For a company that was trading in two-digit territory (<$100 per share) less than a year ago, a move to quadruple-digit territory (>$1,000) would quite impressive indeed!

Learn more about equity trading opportunities.


More from Tech Stocks

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.