$1,000 Invested In Bitcoin On New Year's Day Would Have You Made You $318 Richer — But Wait Until You Hear About Tesla

Zinger Key Points
  • The risk-on sentiment in the market has brought investors flocking to beaten-down high-quality names.
  • Tesla has stood tall and towering over its mega-cap counterparts and analysts are optimistic about more upside.

The financial markets have put to rest all skepticism and launched into a strong rally this year, and assets that were beaten down in 2022 have led the resurgence.

Market On Risk-On Mode: The gains have come despite the Fed signaling more rate hikes for the year. Ironically, market participants have twisted the Fed "disinflation" message to mean rate cuts, while conveniently ignoring the “more hikes for longer" signal.

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The SPDR S&P 500 ETF SPY, an exchange-traded fund that tracks the performance of the S&P 500 Index, has gained 6.5% in just about 27 trading sessions of the year. Cut back to 2022 — the SPY struggled along with the economy and clocked a loss of 18.18%.

The positive momentum saw a small impediment in recent sessions, especially after the release of a strong January non-farm payrolls report. The strong data got people talking about potential rate hikes again.

Tesla Inc. TSLA and Bitcoin BTC/USD are among two assets that have come back up stronger this year. Tesla’s upward momentum has been so strong that it defied the recent downside seen in the broader market.

What has made them tick?

Tesla – The 800-Pound EV Gorilla: Tesla’s history shows that it has always emerged out of a crisis stronger. Its debacle in 2022 had to do more with the external environment, although there is no denying the fact that some of it were self-inflicted.

The Austin, Texas-based electric vehicle pioneer took the bold move of slashing prices across geographies since 2022, showing willingness to sacrifice margins for volume. The aggressive pricing action was seen to hurt its competition, given they are left with the option of choosing between the devil and the deep sea. You either match the price cuts and hurt your margins or maintain the status quo with pricing and suffer market share erosion.

Tesla being Tesla, could afford price cuts because of the scale at which it operates, while upstarts do not have this luxury.

The March 1 Investor Day is another catalyst investors look forward to, seeking to get more clarity on the product roadmap. CEO Elon Musk himself has confirmed the company will drop its Master Plan Part 3 at the event.
The rumored launch of the Cybertruck later this year is widely expected to give a boost to the sagging volumes.

As Morgan Stanley analyst Adam Jonas says, the window of opportunity on valuation may have closed after the 68% rally seen so far this year. But the company has other growth levers it can put to good use.

Bitcoin Roars: Bitcoin has withstood all the doomsday predictions and has rallied hard this year. Market-wide factors that supported risk appetite also served to prop up the apex crypto, which shed a whopping 64.2% in 2022. The weakness in the past year also reflected scandals that rocked the crypto space, including the FTX bankruptcy.

From $16,547.50 at which Bitcoin closed in 2022, it has rallied 31.9% for the year-to-date, based on Thursday’s closing price of $21,819.04. That said, it is still way off its all-time high of $68,789.63 that it reached on Nov. 10, 2021.

Tesla Vs. Bitcoin: An investor who bet $1,000 in Tesla at the end of 2022 would have in possession 8.12 shares. The same shares would be worth $1,683.07, a return of 68.31% in about seven weeks.

If the same $1,000 were invested in Bitcoin, one would have 0.06 units of the crypto. The holding would be worth $1,318.57 at Thursday’s closing price. The return translates to roughly 32%.

Read Next: Bitcoin Tops This Key Level; The Sandbox Emerges As Top Gainer

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Posted In: CryptocurrencyLong IdeasNewsEducationMarketsTrading IdeasGeneralCybertruckDisinflationelectric vehiclesElon MuskEVsFederal Reserve Rate HikesS&P 500 IndexTesla Investor Day
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