LONDON: Bitcoin was fast approaching the $50,000 mark on Tuesday as the afterglow of Elon Musk-led Tesla’s investment in the cryptocurrency had investors reckoning it may become a mainstream asset class for both corporations and money managers.
The most popular cryptocurrency has gained 1,150% from March 2020 lows as institutional investors search for alternative wealth stores and retail traders ride the wave. It traded at a few hundred dollars only five years back.
Monday, it leapt 20% after Tesla announced it had a $1.5 billion investment and that it would eventually take the cryptocurrency as payment for its cars. That was its largest daily rise in more than three years.
The price of one bitcoin climbed to a peak of $48,216 — almost enough to buy one of the best-selling Tesla vehicles, Tesla Model Y SUV. Rival cryptocurrency ethereum struck a record high of $1,784.85 on Tuesday.
Musk, a well-known supporter of cryptocurrencies, foresees accepting the currency as a payment for Tesla cars and analysts reckon this is a larger shift as companies and big investment houses follow small traders into the asset.
“Bitcoin is definitely capturing investors’ attention — I get more and more questions about it,” said Marija Vertimane, senior strategist at State Street Global Markets.
For example, if someone bought a Tesla Model 3 for one bitcoin on Sunday - when it traded for $38,000 - the same car could be bought for just 0.8 bitcoin on Tuesday, when the cryptocurrency traded at $46,413 as of 1145 GMT.
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