The largest cryptocurrency, bitcoin, surged to a record high of over $44,000 on Monday following the news that Tesla has invested $1.5 billion in the digital asset and expects to start accepting it as payment.
Bitcoin soared fifteen percent to trade at $44,141, closing in on an all-time high reached in early January. It was trading at $43,756 as of 15:04 GMT.
US electric car maker Tesla confirmed on Monday in its annual SEC (Securities and Exchange Commission) filing that it has acquired $1.5 billion worth of bitcoin, and said it may also accept the currency as a form of payment for its products in the near future.
That would make Tesla the first major automaker to accept bitcoin as payment. The company said it bought the bitcoin for “more flexibility to further diversify and maximize returns on our cash,” according to the filing.
Tesla founder Elon Musk said recently that while he’s a bit “late to the party,” he is now a supporter of the digital currency.
“I should have bought [bitcoin] eight years ago … I do at this point think bitcoin is a good thing. I am a supporter,”Musk said in a chat on February 1.
“Off Twitter for a while,” the world’s richest man tweeted, without elaborating on the reason for his social media sabbatical.
Although no stranger to the media limelight, Musk has had an unusually chaotic week, in which he voiced support for a Reddit insurgency against a hedge fund’s attempt to short-sell GameStop stock, posted messages that (briefly) sent ‘meme’ cryptocurrency Dogecoin into outer space, and predicted that bitcoin would soon be embraced by the financial sector.
Elon Musk thinks bitcoin is on the verge of broad acceptance
“I do at this point think bitcoin is a good thing,” the billionaire told a chat room on the invitation-only social media app Clubhouse on Monday. “I think bitcoin is really on the verge of getting broad acceptance by conventional finance people.”
Tesla shares were up more than two percent in premarket trading. The company warned investors of the volatility of bitcoin’s price in its SEC filing.
“There will be pullbacks, maybe even to retest the top of the flag as support,” popular crypto trader Scott Melker said on Twitter, adding: “But technically this is a confirmed breakout that should take $BTC to 63K eventually. Disclaimer – patterns rarely reach their targets, but the rules are the rules.”
Bitcoin enthusiasts point to the digital asset as a hedge against inflation and store of value as concerns are rising that US President Joe Biden’s $1.9 trillion virus relief package may risk overheating the economy.
Bitcoin’s free float, a measure of how many tokens are available to trade, has dropped to 13 percent of supply, which is the lowest since 2014, according to Chainanalysis. “This suggests that Bitcoin available to buy remains scarce despite record prices,” Philip Gradwell, chief economist at the blockchain research firm, was quoted as saying by Bloomberg.
Last week, hedge fund legend Bill Miller revealed plans of a $400 million bitcoin investment, saying he will increase his bitcoin exposure by plowing 15 percent of one of his portfolios to buy Grayscale BitcoinTrust shares.
“If retail and institutional interest continues to grow over the next month, bitcoin could target the $45,000 level,” said Edward Moya, a senior market analyst at forex broker Oanda.
Elon Musk has announced that he is staying off Twitter for the time being, after a headline-grabbing week in which he made market-shaking comments about cryptocurrencies and the ongoing GameStop stock drama.
Although no stranger to the media limelight, Musk has had an unusually chaotic week, in which he voiced support for a Reddit insurgency against a hedge fund’s attempt to short-sell GameStop stock, posted messages that (briefly) sent ‘meme’ cryptocurrency Dogecoin into outer space, and predicted that bitcoin would soon be embraced by the financial sector.
In a widely discussed talk that he gave on the invitation-only social media app Clubhouse on Sunday night, Musk conceded that he had to be “careful” about what he says, because his remarks can “affect the market.”
For example, Musk’s recent tweets about Dogecoin have been credited at least in part to the digital currency’s massive, but apparently temporary, surge in value.
The Musk bump has also worked on more established coins. After adding ‘#bitcoin’ to his Twitter bio, the cryptocurrency’s value skyrocketed by nearly 20 percent.
Although it’s unclear why he signed off or for how long he’ll be absent, dozens of comments expressed gratitude for Musk’s indirect participation in the Reddit GameStop saga.
“Thank you for everything Elon,”tweeted @WSBChairman, who became a de facto spokesman for the r/WallStreetBets Redditors who pumped up GameStop’s stock, crippling a hedge fund’s bet against the video game retailer and prompting NASDAQ to temporarily shut down trading.
