The price of bitcoin reached as high as $48,000 on Tuesday, building on gains following news that electric-car maker Tesla has invested $1.5 billion in the cryptocurrency and may accept it as future payment for products.
After reaching a record of near $44,000 on Monday, bitcoin prices
hit $45,000, $46,000 and $47,000 later that evening, according to CoinDesk. Prices reached a high of $48,226 early Tuesday and have since pulled back to $46,450, according to CoinDesk.
Sparking the fresh surge for bitcoin was a Tesla
regulatory filing with the Securities and Exchange Commission on Monday. It revealed Tesla acquired $1.5 billion in bitcoins in January and plans to accept it “as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”
That is as Musk has been at times voiced support for some cryptocurrencies on his Twitter
account. In late January, he tagged bitcoin in his Twitter biography. He has also tweeted as of late about meme-inspired cryptocurrency dogecoin.
For the bitcoin faithful, it was a monumental move by a big company to invest in the digital currency and allow payments. But on the other side, some analysts questioned Tesla’s move, given the volatility of the cryptocurrency, as well as share prices of the electric-car maker.
Even if bitcoin’s price multiplied by five over the past year, it could still come crashing down, said Ipek Ozkardeskaya, senior analyst at Swissquote, to clients in a note. “The high volatility in Bitcoin’s value will therefore inevitably inject a certain volatility in Tesla’s revenue, and decrease the predictability of the company’s performance,” she said.
However, some bitcoin enthusiasts were undeterred. Former hedge-fund manager Michael Novogratz predicted to Bloomberg in an interview that the cryptocurrency will hit $100,00 by the end of 2021 as other companies follow Tesla in accepting bitcoin as payment.
Bitcoin’s year-to-date gain is up more than 60% in 2021. That is against a 4% rise for the S&P 500
and an 8.5% gain for the Nasdaq Composite Index
is down around 3% and crude oil prices
are up 20%.