Tesla Inc. stock got in a bearish market on Tuesday and a couple of analysts pinned that on the Silicon Valley electric-car maker’s current bet on bitcoin.

Tesla TSLA, +1.73% shares are around 22% off their record close. A bearish market is typically defined as a decrease of 20% or more from a peak. For Tesla, a close listed below $706.47, which is 20% off its Jan. 26 record close, would fulfill that requirement.

See likewise: Why did Tesla purchase bitcoin?

Tesla was last in a bearishness in September, around the time of its stock split, news that a major shareholder had sold some of its stake, and a stock offering.

“This pullback truly started after Tesla decided to buy $1.5 billion of bitcoin,” Garrett Nelson with CFRA told MarketWatch. “Although Tesla used a relatively small portion of their total money to make the purchase, it has investors questioning its future growth technique.”

The selloff acquired momentum on Tuesday following late Monday news that Lucid Motors prepares to go public after a merger with a blank-check business, he stated. The deal’s implied evaluation of around $24 billion “is being viewed as extremely frustrating” and as showing adversely on Tesla and other EV upstarts, Nelson said.

American depositary invoices of China-based Nio Inc. NIO, -0.16 %, XPeng XPEV, -1.46% and Li Auto Inc. LI, +0.06% as well as shares of Nikola Corp. NKLA, +1.37% significantly underperformed the broader market on Tuesday.

In a note Tuesday, analyst Dan Ives with Wedbush agreed with the bitcoin connection and the last couple of days of “nasty” declines for the shares, and included another factor of his own.

Tesla dove “into the deep end of the pool” with its bitcoin bet and the company’s “stock is now greatly connected to this digital currency,” Ives said. In theory, the financial investment is fairly little and would not “move the needle for Tesla,” he stated.

“However, understanding is reality on the Street and by Musk and Tesla aggressively
accepting bitcoin (from a transactional point of view also), investors are starting
to connect bitcoin and Tesla at the hip,” Ives stated.

“While Tesla on paper made approximately a $1 billion on bitcoin in a month that exceeded all its EV profits from 2020, the current 48-hour sell in bitcoin and included volatility has driven some investors to the exits,” he stated. The remaining worry is that the “bitcoin sideshow” eclipses Tesla’s total EV development story.

Tesla stopping sales of its most affordable price Model Y combined with ongoing rate cuts have led to Street demand concerns as the bears come out of hibernation mode, stated Ives.

Tesla’s quarterly sales figures are most likely to drive the stock upward and resolve some of those concerns, he stated.

In the meantime, it’s “‘buckle up the safety belt time’ once again for Tesla’s stock with
more volatility on the horizon,” Ives said.

Tesla shares have added 279% in the past 12 months, compared with gains of around 15% for the S&P 500 index. SPX, +0.05%