- Bitcoin has outpaced growth of the top five tech companies, collectively known as FAANG.
- Tesla Inc. is the only positive stock among top companies, gaining 68% when valued in Bitcoin.
- The market is showing a disconnect with value-based investing in stocks, especially TSLA, as economic stimulus propels popular assets.
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Bitcoin has led the one-year gain versus top technology shares like Facebook, Amazon, Apple, Netflix, and Google, including the S&P 500 index.
The only company rising in BTC terms is Elon Musk’s Tesla.
Bitcoin Tackles Leading Tech
Bitcoin’s 400% gains since 2019 have outpaced the growth in leading tech stocks.
The relative price of stocks in BTC is close to new lows, which were attained during the 2017 peak in Bitcoin’s price.
The all-time low of AAPL/BTC and AMZN/BTC is 0.0243 BTC and 0.0638 BTC, respectively. Currently, they are trading at 0.0326 BTC and 0.0785 BTC
While Bitcoin prices have doubled their all-time high value, so has the technology stocks’ price in the same period.
After the pandemic-induced shock in March 2020, the P/E ratio of FAANG companies rose during Q2 of 2020 as stock prices surged to new highs.
The P/E ratio of stocks determines the number of times its share price is valued compared to a company’s annual earnings per share. A higher P/E ratio suggests over-valuation.
Tesla recorded the strongest gains, as its P/E ratio skyrocketed above 1,400 from 0 at the beginning of last year. In fact, TSLA is the only stock among top tech companies with positive gains versus Bitcoin with over 700% gains since January 2020.
The above points to investors’ penchant for overvaluing upcoming assets as the old leaders become less attractive.
The rise in the P/E ratio of stocks after the pandemic shock in March indicates the effects of quantitative easing measures taken by governments through low-interest rates, fiscal and monetary stimulus.
Tesla is just stunning. Value investing professors would have recommended shorting Tesla every single year for the past yen years. https://t.co/Mh6LonL7cc
— Alex Krüger (@krugermacro) January 8, 2021
If the macroeconomic trend continues, Bitcoin’s non-correlation with the economy could see a continued dropping in price versus BTC as it becomes a popular inflationary hedge.
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