Tesla, now strongly linked to Bitcoin, drops in value as cryptocurrency plummets

tesla now strongly linked to bitcoin drops in value as cryptocurrency plummets

Shares in Tesla Inc., were set to plunge into the red for the year on Tuesday, hit by a broad sell-off of high-flying technology stocks and the fall of bitcoin, in which the electric car maker recently invested $1.5 billion US.

Early Tuesday morning, Tesla was down over six per cent in U.S. premarket deals after an 8.5 per cent drop during the previous session.

The firm led by Elon Musk has had a stellar ride since 2020, which it began at about $85 per share, before reaching the $900 mark on Jan. 25.

Currently trading at about $673 in pre-market transactions, the stock has lost 25 per cent from its peak, which is above the 20 per cent level that technically defines a bear market.

Bitcoin plummeted as much as 17 per cent on Tuesday as investors grew nervous at sky-high valuations, triggering the liquidation of leveraged bets and sparking a sell-off across cryptocurrency markets.

The world’s biggest cryptocurrency was facing its biggest daily drop in a month, falling to as low as $45,000.

The drop took its losses to over a fifth from a record high of $58,354 hit on Sunday and underscored the volatility of the emerging asset — though it is still up around 60 per cent this year.

“The kinds of rallies we’ve been seeing aren’t sustainable and just invite pullbacks like this,” said Craig Erlam, senior market analyst at OANDA…

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