Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Bitcoin's steep drop drags Tesla, ARK ETFs along for the ride

Stock MarketsFeb 23, 2021 03:11PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: FILE PHOTO: FILE PHOTO: FILE PHOTO: FILE PHOTO: Man walks by Tesla Model 3 sedans and Tesla Model X sport utility vehicle at a new Tesla showroom in Shanghai 2/2

By Julien Ponthus, Aaron Saldanha and April Joyner

LONDON/NEW YORK (Reuters) - A dive in Bitcoin's price spilled onto shares of Tesla (NASDAQ:TSLA) Inc, which recently disclosed that it held a $1.5 billion investment in the cryptocurrency, and slammed exchange-traded funds holding the stock on Tuesday.

Bitcoin (BTC=BTSP) slumped 13.3% to $46,951.51, tracking toward its biggest daily loss since March. Tesla's shares in turn fell 3.3% to $690.59.

The drop in Tesla shares hit exchange-traded funds (ETFs) such as the ARK Innovation ETF, down 4.9%, and the ARK Autonomous Technology & Robotics ETF, down 4.3%. Both ETFs feature Tesla as their biggest single holding.

Meanwhile, the GraniteShares 3X Long Tesla Daily ETP, a levered exchange-traded product aimed at tripling the daily moves in Tesla shares, ended 22.8% lower in London.

The losses come amid a broader market downturn over the last few days that has seen investors sell shares in a wide range of assets that have notched big rallies in recent months, from technology stocks to cannabis and solar ETFs.

"Over the long term, we think there could be reversion to the mean" among many of those recently high-flying funds, said Todd Rosenbluth, director of ETF and mutual fund research at CFRA.

Rosenbluth added that he had a positive long-term outlook for ARK's ETFs but that their recent performance illustrated the perils of having a concentrated position in one stock. The ARK Innovation ETF has fallen more than 13% since Feb. 12 as volatile bitcoin prices have jostled Tesla shares.

Indeed, some investors may have been preparing for downside in the ETF. Amy Wu Silverman, equity derivatives strategist at RBC Capital Markets, noted that options activity indicated a rise in demand for protection against a decline in ARK.

Bullish sentiment for many of the holdings in the ARK Innovation ETF remains high, Wu Silverman noted. And despite recent weakness, outflows from the fund have been minimal, according to research from Christopher Murphy, co-head of derivatives strategy at Susquehanna Financial Group.

"The ARKK ETF has been the poster child of momentum high fliers and is beloved by retail," Wu Silverman wrote.

Yet some signs point to investors becoming more cautious on Tesla. Skew, an indicator showing the level of demand for protective options positioning, has climbed for Tesla over the past few weeks, according to data from Trade Alert.

Investors focused on environmental, social and governance (ESG) factors may also have cause for concern.

While Tesla has long campaigned to cut global auto emissions through use of its relatively environment-friendly cars, the company's decision to invest in bitcoin could weigh on its ESG rating, Valentijn van Nieuwenhuijzen, chief investment officer at asset manager NN (NASDAQ:NNBR) IP told Reuters on Friday.    Meanwhile, Barclays (LON:BARC) analysts noted there had been a drop in conversations about the company on Reddit's WallStreetBets forum, a popular discussion spot for individual investors, which could explain some of the loss of appetite for the stock.    "With only 2-3 total submissions on each of the past several days, we remain below the trend in attention that has come along with big returns jumps in the past," the analysts said in a note.    Even with the shake-out from a record high above $58,000 two days ago, bitcoin is up 62% this year, and is increasingly being accepted as a mainstream investment and means of payment.

Michael Saylor, chief executive of MicroStrategy, a major corporate backer of bitcoin, told CNBC on Tuesday that the approximately $1 trillion total value of the digital currency could subsume the market capitalization of gold at about $10 trillion.

Bitcoin's steep drop drags Tesla, ARK ETFs along for the ride
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (16)
Rodolfo Barraco
Rodolfo Barraco Feb 23, 2021 3:53PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
bitcoin is heading for under 20k..... so that means ark and tesla is going to lose 50% of its value? i dont think so. maybe along the way, but ark and Tesla both are not just bitcoin... anyway, they are the tulips/yahoo of this bubble and are gonna burst!
Samui Lo
Samui Lo Feb 23, 2021 2:24PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Tesla has been dropping for 5 straight days, not about bitcoin.
Calvin Low
Calvin Low Feb 23, 2021 12:41PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Buy at the dip for TSLA
Rodolfo Barraco
Rodolfo Barraco Feb 23, 2021 12:41PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
sure when its under 200 usd the share, thats a dip, anything else is still bubble territory
Earl Fridley
Earl Fridley Feb 23, 2021 12:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
10% drop in $1.5 billion bitcoin held by TSLA= $110 billion drop in market cap.  Makes complete sense...
Sattar Langary
Sattar Langary Feb 23, 2021 11:39AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Elon Musk and Donald Trump can't control their tongues and/or brains. lol
Stive Silva
Stive Silva Feb 23, 2021 10:43AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Telsa and bitcoin is a bad bet whole Elon is the one that can change the flow with a tweet. I'll wait until it is more reliable than being in the hands of a random tweet.
me ish
me ish Feb 23, 2021 10:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Gates is such a fraud saying that Bitcoin is secretive - the ledger is an open book and far more money laundering goes through the big banks of London and New York every month than has ever gone through btc in its entire history. all transactions can be tracked and traced and Gates knows this - he's just such a deep insider, he's supporting the central banks views on not wanting their control to be weakened by a global currency that they can not control.
Richie Berg
Richie Berg Feb 23, 2021 10:09AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Maybe Telsa should get into the cattle ranching business also, or they should just stick to EV.
Rodolfo Barraco
Rodolfo Barraco Feb 23, 2021 10:09AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
you mean with AI and cybertruck? they could do the entire cattle ranching autonomously! please dont give more ideas to elon, the guy is about to become emperor of the universe with his hands on everything...
Damian Ciceri
Damian Ciceri Feb 23, 2021 10:00AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
the minute a healthy pull back happens people just bash Elon and Tesla. see you in 2025 when Bitcoin is sitting around $500k per BTC and Tesla is around $5k+ per share. I buy during these pullbacks.
Angelia Polsinelli
Angelia Polsinelli Feb 23, 2021 8:44AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I was just thinking, considering Tesla just moved to TX., the state just experienced a completely  anomalous   winter-weather storm and electric cars are notoriously “finicky” in extreme cold...   could be the storm paired with moving expenses, set backs and the like be the missing cause?  Just a thought.
Axel Le Gamin
Axel Le Gamin Feb 23, 2021 8:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Dogecoin to the moooooon
Ronald Warren
Ronald Warren Feb 23, 2021 8:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
And back!
Rajiv Gupta
Rajiv Gupta Feb 23, 2021 8:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Tesla bought bitcoin for around $31k, they are still up $500-600mn on that trade. Find a better reason please.
Ronald Warren
Ronald Warren Feb 23, 2021 8:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
check your numbers.
Notvery Goodathis
Peteymcletey Feb 23, 2021 7:55AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
now they blame bitcoin for tesla drop? lol
Enron Mask
Enron Mask Feb 23, 2021 7:40AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Can understand run from FIAT but cannot forgive really sheet quality. That will destroy brand and company!
The Chad Bull
The Chad Bull Feb 23, 2021 7:25AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Enron Musk
Ronald Warren
Ronald Warren Feb 23, 2021 6:35AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I won't play a fool's game. Tesla or Bitcoin. Right now I'm slaying my dragon with USO.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email