Bitcoin hit a fresh record above US$47 000 on Tuesday after Tesla’s announcement of a $1.5-billion investment in the largest cryptocurrency.
The token rose as much as 6.3% to almost $47 493 in early Asian trading before paring some of the gains. Tesla’s disclosure Monday sent the price soaring.
The company also said it would begin accepting the digital token as a form of payment for its electric cars. The developments amounted to the biggest endorsement of the controversial cryptocurrency by a mainstream firm. Elon Musk, Tesla’s founder and the world’s richest man, has for months been commenting about bitcoin, buffeting its price.
Tesla’s decision may be “a catalyst for other companies to go that route,” said Julius de Kempenaer, senior technical analyst at StockCharts.com, adding a new bull run is underway in the token.
A rally was also evident in bitcoin futures, suggesting shorts are throwing in the towel and signalling traders won’t fight the crypto advance. The wider Bloomberg Galaxy Crypto Index, which includes bitcoin, ether and three other tokens, jumped to a record.
Japanese and South Korean cryptocurrency-exposed stocks rose, tracking a rally in their US and European peers.
Big swings
Bitcoin’s journey to its latest summit came with big swings that continue to stoke controversy about its outlook. Predictions for its possible long-term price range from $400 000 and more to zero.
Proponents cite backing from the likes of Musk and signs of interest from long-term investors as evidence of a durable rally. They also envisage a role for the token as a hedge for risks such as faster inflation, akin to gold.
Others continue to see speculators at work and are reminded of the 2017 boom that turned to bust. The token is designed to have a fixed supply of 21 million coins, underpinned by a digital ledger distributed across computer networks.
Bitcoin has more than quadrupled over the past year. Commentators have cited day traders, wealthy buyers, hedge funds, companies and even signs of interest from usually staid investors like insurers for the climb. — Reported by Joanna Ossinger, (c) 2021 Bloomberg LP