This Bubble of 2020 Looks A Lot Like XRP of 2017 & What Bitcoin Would After Breaking $20K

The asset gained $108 billion in market value in two weeks, seeing mounting short interest while short-sellers have already lost $18 billion in 2020, and making its CEO the world’s seventh-richest person. “What’s the fundamental value? ... It comes down to scarcity.”

The stock market has been flying, especially tech stocks, which makes sense because the sector is relatively less affected by the coronavirus pandemic.

One such stock is Tesla, which gained $108 billion in market value in two weeks. On Friday, TSLA surged 11% to close at a record $1,544.65 as investors bet demand for the electric-car maker's vehicle remains strong.

tradingview-tesla
Source: TradingView – Tesla $TSLA

Tesla cut prices for its electric SUV Model Y, the latest one with the lowered price, to attract buyers amidst the economic fallout from the COVID-19 pandemic.

What are the Fundamentals?

In 2020, Tesla stock prices have jumped 230%, becoming the most valuable car company on the planet.

“Tesla's valuation doesn't make sense by any traditional measure,” said Ivan Feinseth of Tigress Financial Partners. However, “it is not a traditional company, so how do you put a traditional measure to it?”

According to economist and crypto trader Alex Kruger, Tesla stocks are looking like what he would expect bitcoin to look when it finally breaks above its all-time high of $20,000.

“When such breakouts occur, animal spirits take control, and all you know is that price will likely run a lot. Fundamentals don't matter then.”

As Dan Ives, managing director of equity research at Wedbush, said, “What's the fundamental value? If you have a million-mile battery, what does that add to the stock? … It comes down to scarcity. How do you play the EV market? … It all comes down to the P-word: profitability.”

Short the Short-Sellers

The price of Tesla shares spent about six years in the $200 – $300 range, and during that time, speculators continued “screaming ‘bubble.'” Tesla was also the most shorted stock in the Nasdaq, by the largest margin, noted Kruger stating, “(Tesla) needed a catalyst to break out of the range,” which was its Shanghai Gigafactory.

Even today, the company is set to become the first to hit a short interest level of $20 billion. And if the short squeeze happens, it could push the price even higher. Already, Tesla short-sellers have lost $18 billion this year.

In turn, Tesla CEO Elon Musk teased on Twitter, ‘Who wears short shorts?', and said that, “Tesla will make fabulous short shorts in radiant red satin with gold trim,” and “Will send some to the Shortseller Enrichment Commission to comfort them through these difficult times.”

He launched the Tesla short shorts with “S3XY” emblazoned on the back and were so in demand that the website went down.

The Bubble of 2020

Amidst this uptrend, Musk has become richer than Warren Buffett and the world's seventh-richest person. The 49-year old owns a fifth of Tesla's outstanding stock that makes for $70.5 billion of his fortune while his majority of ownership for SpaceX accounts for about $15 billion.

Many, however, argue that Tesla is a bubble.

“Headlines remind me of Ripple in Dec/2017-Jan/2018. Too much hope in the air. The market is not taking risks into account properly. But at least Tesla produces cool cars, and has Elon at the helm,” said Kruger.

Overzealous Robinhood traders are the real culprits who are using the stimulus money to pump the stock while stuck at home due to lockdown with time and internet at their disposal.

These traders have been driving even the stocks of the bankrupt companies; recently, they pumped the “joke cryptocurrency” DOGE.

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AnTy
AnTy
AnTy has been involved in the crypto space full-time for over two years now. Before her blockchain beginnings, she worked with the NGO, Doctor Without Borders as a fundraiser and since then exploring, reading, and creating for different industry segments.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

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