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The world’s largest cryptocurrency, Bitcoin, extended record gains on Tuesday to new highs now that investors estimate it will become a major asset class for both corporations and money managers following Tesla Inc.’s investment in the cryptocurrency.
Bitcoin has more than doubled in two months as institutional investors seek alternative wealth stores and retail traders ride the wave. Monday’s jump after Tesla’s announcement was its biggest daily gain in more than three years.
It traded at an all-time high of $ 48,216 late on the Asian afternoon on Tuesday. Rival cryptocurrency Ethereum had hit a record high of $ 1,784.85 early in the morning.
Shares of companies that provide bitcoin trading platforms and the technology to “mine” the cryptocurrency increased in China, South Korea and Australia, and large computer chip makers such as SK Hynix also increased.
The US dollar tumbled against most currencies.
Analysts estimate that Tesla’s announcement that it had bought $ 1.5 billion in bitcoin and would take the cryptocurrency as payment for cars is part of a larger shift as companies and big investment houses follow small ones. traders on the asset.
“While you can buy a Tesla with bitcoin now, I’m not suggesting that you do,” said Michael Bucella, a partner at crypto investment firm BlockTower at CNBC. “We are in a position where these are the first phases of an allocation to bitcoin from the institutional and corporate community.”
Bitcoin is already up 62% this year, on top of a 300% rally last year, as investors seek alternatives to the dollar due to 0% interest rates from the US Federal Reserve.
Central bankers and regulators, particularly in China, are also beginning to embrace issuing their own digital currencies for everyday use, in a major break with the conventional workings of global finance.
“Digital currencies, it seems clear to us, are going to be a growing part of the financial architecture very broadly and potentially portfolios going forward,” said Ben Powell, APAC’s chief investment strategist at the Investment Institute of BlackRock on CNBC.
“Not only is there news in the US about the bitcoin situation, but in China, we have a launch of China’s digital currency with so-called ‘red packets.’
Tesla boss Elon Musk has long been a fan of cryptocurrencies, he has talked about them online, but Tesla’s hard currency investment was a surprise that has set a rocket ship in the sector.
Even Dogecoin, a joke cryptocurrency with a dog as a symbol, has seen its value supercharged after Musk mentioned it on Twitter. It is up 13% in the last day, according to CoinMarketCap.
Feitian Technologies Co. Ltd. China, which makes technology for digital payments, rose 4.47% on Tuesday.
Beijing will issue 10 million yuan ($ 1.55 million) worth of digital currency to residents that can be used during the Chinese New Year holidays starting Thursday, national media reported.
In addition, the Chinese are expected to send billions of yuan to each other over the week-long vacation via chat apps like WeChat, digital versions of traditional “red packet” envelopes filled with cash.
