Musk does it again: Bitcoin reaches record high on Tesla’s investment

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February 09 2021
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Bitcoin surged to an all-time high overnight after news emerged that Tesla had backed the emerging coin with an investment of over US$1.5 billion ($1.9 billion), with the company also declaring that bitcoin will soon become an accepted currency for its products.

Bitcoin reaches record high on Tesla investment

Bitcoin’s value has surged past US$44,000 ($56,000) after Elon Musk’s US$1.5 billion ($1.95 billion) show of confidence in the cryptocurrency.

Overall, the coin added as much as 15 per cent to its value after Tesla made the disclosure in a regulatory filing. But the world’s richest man went a step further in boosting the currency’s popularity by declaring that Tesla will shortly start accepting the digital token as a form of payment for its electric cars.

“In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximise returns on our cash that is not required to maintain adequate operating liquidity,” the filing said.

The sudden growth in price follows January’s surge when investors and hedge fund managers bet on it becoming a more mainstream payment method. As a result, the digital coin has more than quadrupled in value since the start of 2020.

But sceptics, including the RBA, have been vocal against the coin, branding it as highly volatile, with regulators warning it is vulnerable to illicit use.

RBA assistant governor Michele Bullock said bitcoin isn’t a focus for the bank.

“It’s not even really money,” Ms Bullock told the House economics committee in Canberra.

“There’s a lot of fuss about [bitcoin] as a financial asset, but it’s not really a payments instrument; consumer protection isn’t really our thing,” she said.

However, eToro’s cryptoasset analyst, Simon Peters, said the large investment further proves the sceptics wrong.

“If there were any doubters as to the mainstream acceptance of bitcoin, this surely must mark the end of any scepticism. Multiple other brands already accept bitcoin as payment, and we would imagine that, in time, other major companies will follow Tesla’s example,” he said.

“The world is moving online more and more, and bitcoin sits at the heart of online transactions, and with this kind of endorsement from a multibillion-dollar company, it’s likely the price will hit $50,000 by the end of the week.”

Mr Musk, a longtime supporter of the alternative asset class, also recently threw his support behind dogecoin, an asset originally launched as a joke coin before growing in value.

The token climbed to a peak of about 8.2 US cents and a market capitalisation of $10.5 billion Monday before pulling back, according to pricing data from CoinGecko.

The coin was ranked among the top 10 cryptocurrencies by market value, the figures showed.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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