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Tesla, Dogecoin & Institutional Interest: A Data Perspective by IntoTheBlock

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Published on:
February 10, 2021

This week, IntoTheBlocks take a dive into the rather wacky goings-on with Tesla, Dogecoin, Elon Musk...and Bitcoin?

Table of Contents

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Every week, IntoTheBlock brings you on-chain analysis of top news stories in the crypto space. Leveraging blockchain’s public nature, IntoTheBlock’s machine learning algorithms extract key data that provide a deeper dive into the major developments in the industry. 


This week we analyze the impact Tesla and Elon Musk have had on crypto. Particularly, we dive into data comparing the types of players getting involved with Bitcoin vs. Dogecoin and what may come next. 

Tesla Renews Institutional Interest in Bitcoin

Tesla has caused major ripples throughout the crypto after disclosing it bought $1.5 billion in Bitcoin and plans to accept crypto as payments. The announcement comes a few days after Elon Musk changed his Twitter bio simply to “Bitcoin.” Elon Musk has since deleted the bio, but announced something much larger. 


Tesla joins the likes of Square and MicroStrategy as public companies owning Bitcoin on their balance sheet. With the addition of Tesla’s investment, this would mean over $6 billion in Bitcoin is held by publicly traded corporations as per Bitcoin Treasuries


The electric vehicle company is now the second largest publicly-traded corporation holding Bitcoin, second only to MicroStrategy. In comparison to Michael Saylor’s company, though, Tesla’s stock had already accrued remarkable growth prior to investing in Bitcoin. 


priceperformance
As of Feb. 10, 2021 through IntoTheBlock’s free capital markets insights 


Bitcoin has slightly underperformed Tesla over the last year, though the gap between the two has been narrowing. Additionally, while the two appeared to move in tandem in early January, their correlation coefficient has dropped to only 0.07, implying little to no statistical relationship between the two in the past 30 days. However, this is likely to increase following Tesla’s investment of 8% of its cash available in Bitcoin. 


While institutional adoption has already been a recurring narrative for Bitcoin in 2020 and 2021, Tesla may be kicking off interest amongst a broader category of large corporations. On-chain data suggests that this widespread institutional interest may have already begun.


transactionsize
As of Feb. 10, 2021 through IntoTheBlock’s Bitcoin financial metrics


The average transaction size recorded on the Bitcoin blockchain had just hit a record the day Tesla announced their investment, just to be shattered by next day’s whopping $440,000 average transaction. The high magnitude of six-figure transactions point to institutional activity in Bitcoin reaching new highs. 


Needless to say, the market has taken much more positively Tesla’s actions over Elon’s bio update. Not only did Bitcoin hit new highs on the day of Tesla’s disclosure, but exchange activity pointed to low impact on sellers. Typically as the price of a cryptoasset increases, so do exchange deposits as investors look to take profits. 

Net Flows — which subtract exchange deposits (inflows) minus withdrawals (outflows) — hit a yearly high following Elon Musk’s update. On the day of Tesla’s announcement, though, net flows barely increased, potentially signalling that this move could be more indicative of a point of inflection than a selling opportunity. 


netflows
As of Feb. 10, 2021 through IntoTheBlock’s Bitcoin exchange metrics


Now onto Elon Musk’s other favorite cryptocurrency. 

Doge Wows Investors


elonsmusksdoges
Source: Twitter


From Elon Musk to Kiss’s bassist Gene Simmons to Snoop Dogg to Mia Khalifa… Dogecoin has grown virally. The meme cryptocurrency started as a joke has managed to reach a market capitalization of over $10 billion.


While Elon Musk recently admitted his comments on Dogecoin are “mostly a joke,” the market may be taking the currency more seriously than he does. Sparked by celebrity (unofficial) endorsements, retail interest in the meme cryptocurrency has spiked massively. 


cmcdoge
Source: CoinMarketCap


Having increased approximately 90x from its March bottom, it is fair to say that Dogecoin has gone parabolic. Note that this is the case even with the logarithmic scale on the chart above.


Along with the remarkable appreciation, Dogecoin speculation has certainly followed. This is evidenced by the number of addresses that have been holding Doge for under 30 days — categorized as traders by IntoTheBlock. 



traders
Source: IntoTheBlock


Within the last month the number of traders in Dogecoin has reached new highs, increasing over 30% in the last month alone. At the same time, the total volume belonging to traders has decreased by 3%, indicating that high volume traders may no longer be holding. 


Instead, it is mostly retail traders taking part in the recent surge in Dogecoin. Despite managing to increase dramatically, Dogecoin’s average holder has less than $3,000 worth of Doge. 


averagebalance
Source: IntoTheBlock


For comparison, Bitcoin’s average balance is approximately $24,000. This further displays the retail-driven mania markets have been experiencing. Following Gamestop’s quick boom and bust, investors are advised to proceed with caution as meme assets favored by retail investors have demonstrated to be volatile and highly speculative. 


While there certainly still is retail participation in Bitcoin, Bitcoin’s investment from large corporations such as Tesla may be much more telling than all the Dogecoin tweets together. Despite Elon Musk’s interest in both, on-chain data suggests demand for Bitcoin is stemming from much larger players than Dogecoin’s. 


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Author(s)

Lucas Outumuro

I'm a senior analyst at IntoTheBlock, where I actively research crypto and analyze key indicators for growing areas such as DeFi.

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