For most investors, the volatility associated with Bitcoin (BTC) is what is most glaring and known about the premier digital currency. Bitcoin has so much volatility that its price, which recently hit a new all-time high above $28,000 as reported by Cryptoknowmics on December 28, may plunge to a significantly lower price in a few weeks or months.
Amidst the obvious volatility, however, the shares of electric vehicle manufacturing company Tesla Inc. (TSLA) has had a much more volatile year than Bitcoin. While Bitcoin was the sensational digital currency that many watched in the crypto sphere, Tesla shares remain investors’ favorite in the U.S. stock market.
Bitcoin opened the year at a price well below $10,000 and through a tumultuous year in which both the global stock market and the cryptocurrency markets crashed in March as a result of Covid-19 and global lockdown. However, Bitcoin managed to tick some significant gains. The coin has risen by 220% this year, according to crypto data aggregator Coingecko.
The coin has also seen a 58% surge in the past 30 days, complemented by a 15.1% rise in the past week. At this current pace, Bitcoin may end the year even with a much bigger surge than the current 220% it has amassed thus far.
Tesla shares have also seen a profitable year marked by the stock’s inclusion in the S&P 500 Index after the company recorded profitability for the past 5 quarters. While Bitcoin has seen a 220% surge in value, Tesla shares have grown by as much as 676% in 2020, bolstered by continuous backing by the company’s investors.
Seeing the visible growth difference, CoinShares Strategist Meltem Demirors told CNBC that bitcoin’s volatility is not “So Wild” when compared to stocks like Tesla.
“If we look at the astronomical rise in the equities market, bitcoin’s rise actually doesn’t feel so wild,” Demirors said. And just like many detractors warn about Bitcoin being an advanced form of Financial scam, many analysts also believe that Tesla shares are overvalued making the company to surpass as much as nine of the world’s biggest automobile manufacturers such as Toyota, BMW, Volkswagen, General Motors, and Audi amongst others.
While analysts are divided about the prospect of Tesla despite the growth it has recorded this year, Bitcoin is also suffering the same faith with critics like Peter Schiff warning investors from taking a position with BTC, but others including Demirors believe that;
“It used to be a career risk to get exposure to bitcoin, now it is a career risk to not have exposure to bitcoin. The world has certainly changed a lot over the last nine months.”
The duo of Bitcoin and Tesla have impressed the investing world with their growths this year and many analysts or critics are waiting for Bitcoin's price to retrace and Tesla to struggle in the S&P 500 to prove their bearish position and calls right.
Both asset classes, which are significantly built with different fundamentals, will need to prove that they are not programmed for unsustainable growth and that the growth of this year may just be the springboard for new heights in the near future.