Bitcoin breaks US$44,000 on Tesla investment news

Bitcoin breaks US$44,000 on Tesla investment news

FILE PHOTO: A representation of virtual currency Bitcoin is seen in front of a stock graph in this
FILE PHOTO: A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken January 8, 2021. REUTERS/Dado Ruvic/File Photo

LONDON: Bitcoin jumped more than 15 per cent on Monday (Feb 8) to a record high after Tesla said it had invested US$1.5 billion in the most popular cryptocurrency last month.

The news sent Bitcoin soaring as high as US$44,525.29 around 9.30pm Singapore time, before cooling slightly, according to cryptocurrency exchange Gemini.

The announcement came after two weeks in which comments from chief executive Elon Musk encouraged small-time investors to buy bitcoin and meme-based digital currency Dogecoin as well as shares of US video game chain GameStop.

READ: Tesla buys US$1.5 billion in bitcoin, to accept it as payment for cars soon

Musk said a week ago in a tweet that bitcoin was "on the verge" of being more widely accepted among investors.

Analysts said the move by Tesla was liable to prove a game changer for the currency.

"I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move," said Eric Turner, vice president of market intelligence at cryptocurrency research and data firm Messari.

"One of the largest companies in the world now owns Bitcoin and by extension, every investor that owns Tesla (or even just an S&P 500 fund) has exposure to it as well."

READ: Commentary - The rise and further rise of Bitcoin

Tesla said in a filing the decision was part of its broad investment policy as a company and was aimed at diversifying and maximizing its returns on cash.

It said it had invested an aggregate US$1.5 billion in bitcoin under the changed policy and could "acquire and hold digital assets from time to time or long-term".

Bitcoin is up about 50 per cent this year following gains of more than 300 per cent in 2020.

Source: Reuters/CNA/aj

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