VictorCobra

Bitcoin Performance Across Assets (Gold, SPX, and TSLA)

Long
This is a simple study, much like the one I published in early July, where I suggested buying Bitcoin as it approached a long term trend against SPX could be a good decision. Here's the post:
In this analysis, I offer two additional comparisons. On the left is Bitcoin's performance versus Gold . Interestingly, Bitcoin has pulled away from the trendline and successfully retested the previous high as support. The 314 level is a loosely calculated representation of where Bitcoin would reach Gold's market cap, at current Gold valuation. In yellow, I'd drawn what I think could happen if the bull market for crypto continues. Ultimately, I think BTC / Gold will test that trendline again, but it may happen at a much higher price.

Some people would say doing TA on these ratios is pointless, but I find it interesting. Bitcoin has also tested its previous ATH against SPX and bounced from near the trendline (middle chart).

On the far right, we have Bitcoin's performance versus Tesla . This one is particularly intriguing. TSLA is one of the few assets that has actually outperformed Bitcoin for much of the last three years. Since 2018, the ratio has not made a new all-time high. Based on the chart, the trend is sideways, and it's hard to know whether or not Bitcoin will outperform TSLA stock. The fact that the two have performed similarly over the last few years is not really a surprise --- both are tied to significant innovation.

Just for fun, here's the ETH/ TSLA ratio, showing consistent lower highs since 2018:
And here's the BTCUSD and TSLA charts side by side, showing that they aren't necessarily correlated, but that they have both had explosive gains over the last decade. The chart also shows that the largest periods of parabolic growth occur somewhat in tandem. This likely has to do with general economic conditions and investor sentiment at the time. TSLA bottomed in 2019 when Bitcoin topped (also intriguing). Since then, TSLA has largely outperformed.
What about Amazon, the growth stock of all growth stocks? Bitcoin briefly made some slightly new highs on that ratio, but has overall NOT outperformed AMZN since 2018. It maintains a long term bullish trendline, however.
What does this tell me?
1) Bitcoin is still vastly outperforming traditional indexes.
2) Bitcoin is still outperforming Gold .
3) Bitcoin and Ethereum are not really outperforming TSLA or other "growth" stocks like Amazon, although they could again in the future.
4) Crypto is doing its own thing, though it tends to do best when other growth assets are also trending hard.

#3 is the important point. Does this mean crypto has yet to achieve its cycle high? Or does it mean TSLA and cryptocurrencies are both overvalued, since if TSLA and AMZN drop, crypto would likely fall harder? Or, if TSLA / AMZN go sideways, can crypto outperform once more? Without a clear trend, it's hard to tell. But if crypto is done with outperforming TSLA , perhaps it's losing some momentum.

I'm very curious about the evolution of cryptocurrencies, and how the space will look another decade from now. They will likely be a significant part of our financial future, but we do not know what their valuations will look like. I'm curious to see if prices will end up stabilizing eventually.

Crypto is doing its own thing, and has solidified its place as a high-performance growth asset, along with AMZN and the like. Personally, I enjoy holding crypto because I'm participating in a global financial network, and it has the potential to truly change the way we think about money, and the way we use it. We're probably a ways away from that future, but I like being part of the journey.

This is not financial advice! This is meant for speculative purposes only. As a side note: I'm in a fiction-writing mood. A while ago, I wrote a post about how analyzing the crypto market felt like science-fiction. It's feeling more like that every day.

I'm about to head back to my second (and final) year of graduate school. I do this in my free time because it's an obsession, hobby, and a passion. I want to start devoting more time to my podcast and other creative work, so my posts may become a little more sporadic. If you would like to support me, you can follow updates regarding my podcast. These things take time, especially when you have your hands in a lot of pots, like I do. In the mean time, you can support me by using my Mudrex referral link, in my signature below. A comment or a message also goes a long way! Thank you for reading!

-Victor Cobra


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