Tesla (TSLA) - Get Report and bitcoin - two 21st century investments that have become attached at the hip thanks to Tesla's $1.5 billion investment in the world's biggest cryptocurrency - both took off in tandem last week, and both plunged back to earth on Tuesday after Tesla CEO Elon Musk implied that the price of bitcoin may be a little lofty.
Tesla plunged more than 11% on Tuesday, dipping below where it entered the S&P 500, while bitcoin dropped below $50,000, losing its $1 trillion market value status.
Bitcoin’s rise has been fueled in part by speculators betting it has already become “digital gold” - an asset class that has equal if not greater chances of retaining its value, and in turn being a hedge against risks such as inflation.
Tesla’s share price, meantime, has continued its own march higher amid investor expectations that the company will continue to dominate the EV market, even as other automakers unveil large-scale plans to ramp up their own EV production, and as EV startup Lucid Motors pulls up to the starting line with its own SPAC offering.
Watch the above video to get more context into why Tesla and bitcoin are currently intertwined, and what's potentially next for both.