Why Tesla Stock Fell To New Lows?

Tesla Video 19.05.21.

Tesla Stock Remains Under Pressure

Tesla stock declined to multi-week lows as traders continued to move away from riskier assets. The main catalyst for today’s move is the huge sell-off in the crypto market which was triggered by China’s decision to ban the country’s financial firms from crypto business. Shares of payment companies which have recently bet on the wider adoption of cryptocurrencies, Square and PayPal, were also under pressure today.

While Elon Musk has recently stated that Tesla would not accept Bitcoin as payment for its cars due to environmental concerns, Tesla continued to hold a position in Bitcoin. Today, Bitcoin made an attempt to settle below the $30,000 level but then rebounded above $35,000.

The crypto market sell-off highlighted the change of market sentiment towards riskier assets. Worries about inflation increased in recent weeks, and investors started to get out of high-growth stories. For Tesla, this process began at the beginning of this year since the stock is down by almost 40% from highs that were reached back in January.

What’s Next For Tesla Stock?

The key question right now is whether the recent pullback will attract speculative traders who will be ready to establish new positions in Tesla. Tesla stock stays overvalued by traditional metrics, and the near-term direction of Tesla shares will mostly depend on market sentiment.

Back in March, Tesla stock received strong support near current levels and quickly rebounded towards the $700 level. However, the situation looks more challenging for Tesla stock now as inflation worries increased and traders continued to get out of high-flying stocks that performed well in 2020.

If the market stays focused on valuation, Tesla stock may find itself under more pressure in the upcoming weeks. However, if the Fed manages to calm investors and signal that it is ready to provide support in case markets move lower, Tesla should attract enough buyers after declining by roughly 40% from all-time highs.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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