Bitcoin zooms 15% as Tesla invests $1.5 billion

Dubai - As Tesla made the disclosure in a regulatory filing, Bitcoin price exceeded $44,000 for the first time

Issac John

Published: Mon 8 Feb 2021, 5:22 PM

Last updated: Mon 8 Feb 2021, 6:54 PM

Bitcoin surged as much as 15 per cent to an all-time high on Monday after electric car maker Tesla said it has invested $1.5 billion, becoming the biggest company yet to back the controversial cryptocurrency.

As Tesla made the disclosure in a regulatory filing, Bitcoin price exceeded $44,000 for the first time. Tesla also said it would begin accepting the digital token as a form of payment for its electric cars.

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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

In a massive sign of support for the cryptocurrency, which has been criticised by policymakers for facilitating money laundering and fraud, 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.

Dubbed by adversaries as “a mother of all bubbles” Bitcoin’s dizzying rally over the past two months to a record has been marked with big swings that continue to stoke uncertainty about its outlook. Some of its biggest critics including Warren Buffett derided the digital currency as “probably rat poison squared. Economists Dr Nouriel Roubini and former White House chief economic advisor Gary Cohn had described it as an asset class with “no intrinsic value, not backed by any asset, and not a legal tender.

“The world’s richest man allocating $1.5 billion of his company’s treasury to Bitcoin speaks volumes about the magnitude at which crypto gains institutional adoption,” said Antoni Trenchev, managing partner and co-founder of Nexo in London. “Tesla has now paved the way.”

Trenchev said he expects that at least 10 per cent of S&P 500 companies will be investing in Bitcoin by the end of 2022.

Other companies have made similar investments in Bitcoin. MicroStrategy has spent some $1.1 billion on the token.

Predictions for Bitcoin’s possible long-term price range from $400,000 and more to zero. The token is designed to have a fixed supply of 21 million coins, underpinned by a digital ledger distributed across computer networks.

— issacjohn@khaleejtimes.com