Bitcoin price surged above $46,000 to an all-time record after Elon Musk’s electric vehicle company Tesla announced that it has bought $1.5 billion worth of bitcoin.
Tesla has also said it will start accepting payments in bitcoin in exchange for its products starting on a limited basis and subject to applicable laws.
In a filing before the US Securities and Exchange Commission, Tesla disclosed that since last month, it has updated the investment policy “to provide more flexibility to further diversify and maximize returns in cash” that is not required to maintain adequate operating liquidity.
Tesla said it has invested $1.5 billion in bitcoin as part of its company policy to “invest a portion of [the company’s] cash in certain specified alternative reserve assets.”
The company had more than $19 billion in cash and cash equivalents on hand at the end of 2020, according to its most recent filing.
The announcement also helped boost the price of bitcoin that was up 12% in Monday’s morning trading while Tesla share were also up 2% in early trading.
Tesla’s announcement of its bitcoin purchase has raised questions around the company’s CEO Elon Musk who has been actively tweeting about cryptocurrency in recent weeks. Mr. Musk has also added “#bitcoin” to his Twitter profile page, which further drove up the price of the digital currency.
As a result of Musk’s hyping of the digital monies, cryptocurrencies like bitcoin and dogecoin has seen remarkable surges in their value in the past weeks.
The world’s largest cryptocurrency was trading 15% higher at $44,141 after Tesla’s announcement on Monday, according to Coin Metrics. Bitcoin just finished a banner year with its price more than quadrupling in 2020.
The following day after Tesla’s announcement, bitcoin price further accelerated briefly to an all-time high of above $48,000 on Tuesday morning as investors rushed into buying the digital currency. The rally however slipped slightly but was up 6% to $46,214 before closing.
Despite the excitement on the digital currency, many analysts believe bitcoin remains very volatile but the decline in value of the dollar could support the bitcoin price further, with some investors seeing the cryptocurrency as a hedge against a drop in the value of traditional currencies.
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