The recent bubble that seems to be forming with the shares of Tesla Inc. is greater than that of Bitcoin at the end of 2017.
Bloomberg reveals this in an article quoting Gordon Johnson’s statements from GLJ Research.
Johnson notes that Tesla’s 14-day relative strength index (RSI) has recently reached 92.5, while in December 2017, when BTC hit $19,511, its 14-day RSI only reached 91.
The RSI is an indicator of the magnitude and persistence of price movements, and the chart reported by Bloomberg reveals that in June 2019 Bitcoin reached 90 again. It had also previously reached almost 100 points in the second half of 2015 and exceeded 90 in the first half of 2016.
As far as Tesla shares are concerned, however, the highest peak reached in the past with regard to the 14-day RSI was about 85 in early 2017, and the recent peak at 92.5 is the highest ever reached.
It’s also curious how the lowest point reached by Bitcoin’s RSI was about 10 points in November 2018, just before the last big crash that brought the price to around $3,000.
Instead, the minimum value reached by Tesla shares was about 20 points, twice the minimum Bitcoin’s RSI at the beginning of 2016.
No correlation between Tesla and Bitcoin
The two RSI indices of Tesla and Bitcoin are clearly unrelated, but the comparison between the highest and lowest points makes perfect sense.
Moreover, since an asset is considered overbought if the RSI exceeds 70, at this moment the Tesla stock is considered extremely overbought.
As a result, the Tesla stock is now more overbought than Bitcoin was during its last big speculative bubble, in mid-December 2017.
Yesterday alone, the Tesla stock gained almost 20% in a single day, and in the last 12 months, it has registered a stratospheric +149%, reaching a market capitalization of 140 billion dollars. Note that the market capitalization of Bitcoin today is around 167 billion dollars, hence even the two market capitalizations are very close at the moment.
It now remains to be seen whether Tesla shares will do the same as Bitcoin in December 2017, when the bubble burst, bringing the price from around $20,000 to around $6,000 in less than two months, or whether the growth will continue, despite such a high RSI.