The value of Tesla overtook the value of all the bitcoins in the world in early June, and has stayed ahead ever since.
The bull case for Tesla is fundamentally optimistic. It involves a real company coming to dominate the global mobility industry.
- If Tesla gets big enough, and interest rates stay low for long enough, then the present value of its future profits might conceivably be even higher than the current $730 billion.
The bull case for Bitcoin is fundamentally pessimistic, or at least anarcho-libertarian.
- It involves the erosion of national power, the implosion of fiat currencies, the return of double-digit (or higher) inflation, and a global rush to the perceived safety of an asset class that will always be supply constrained.
Between the lines: The two speculative bets have tracked each other closely over the past year. That’s because the real driver of their prices is technical market factors. People buy things that are going up, especially when they’re feeling rich.
- It’s called the “momentum” strategy, and it generally works very well, until it doesn’t.