Digital currency bitcoin spiked on Monday, hitting a record high of $44,795.20, after Elon Musk’s electric automaker Tesla invested $1.5 billion in the currency.
The cryptocurrency is up by about 50 per cent since the start of the year.
“This is probably one of the biggest developments for the cryptocurrency industry,” said an analyst at ThinkMarkets, Fawad Razaqzada.
He “Tesla is going to be a major player in the auto industry and if it starts accepting bitcoin as a form of payment, it will give the digital currency further legitimacy.”
A number of central banks have responded to the rise of cryptocurrencies and the dwindling global use of cash by announcing plans for bank-backed digital units.
Unregulated by any central bank, bitcoin emerged as an attractive option for investors with an appetite for the exotic — although criminals have also picked up on its under-the-radar appeal.
Tesla’s announcement, in a US Securities and Exchange Commission document, is a sign of confidence in the cryptocurrency that regulators are concerned could be used for illegal transactions.
“As more and more companies start accepting bitcoin, this will only lead to further increases in demand in a market which is limited in supply,” Razaqzada added.
“Therefore, the long-term outlook on bitcoin remains bullish even if it is starting to look quite expensive in fiat currency terms.”
Tesla’s move comes after CEO Musk last week changed his Twitter bio to read simply “#bitcoin”.
Just 12 years old, bitcoin has seen a meteoric rise since March, when it stood at $5,000, spurred by online payments giant PayPal saying it would enable account holders to use cryptocurrency.
Debate has raged over the status of the digital asset, launched in late 2008, as to whether it should be seen as a form of money, an asset or a commodity.
After the unit — worth a handful of cents in late 2008 — surpassed $1,000 for the first time in 2013, it increasingly began to attract the attention of financial institutions and has experienced wild price swings.
Tesla’s move is “the kind of backing that can take bitcoin through $50,000”, remarked Neil Wilson, chief market analyst at Markets.com.
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