On Tuesday, Bitcoin expanded gains to a record high as the afterglow of Tesla Inc’s blockchain acquisition had investors expecting it to become a common asset class for both companies and money managers.
As institutional investors quest for new wealth stores and online traders ride the trend, Bitcoin has more than doubled in two months. After Tesla’s launch, Monday’s leap was the biggest daily raise in more than three years.
It was trading at a record high of $48,216 late on Tuesday afternoon in Asia. A historic high of $1,784.85 was made by Competing cryptocurrency ethereum in the early morning.
In China, South Korea, and Australia, shares of companies that have bitcoin exchange sites and the technologies to “mine” the cryptocurrency rose and major computer chip making companies such as SK Hynix also rose.
Over other currencies, the US dollar plummeted.
Tesla’s statement that it has acquired $1.5 billion of bitcoin and that it will take the blockchain as car payments is indicative of a broader trend as corporations and big investment houses are chasing small traders through the commodity, experts claim.
Michael Bucella, partner of crypto investment company BlockTower on CNBC, said that while you can now buy a Tesla with bitcoin, I wouldn’t recommend doing so. “We’re in a position where these are the earliest phases of the institutional and corporate community’s allocation to bitcoin.”
This year, Bitcoin is now up 62 percent, on top of a 300pc surge last year, while buyers are scrambling for alternatives to the greenback because of the 0pc interest rates of the United States Federal Reserve.
In a big break from the traditional workings of global finance, central bankers and regulators, especially in China, are also beginning to support issuing their own digital currencies for daily use.
Ben Powell, APAC chief investment strategist at BlackRock’s Investment Institute, said on CNBC, “Digital currencies, it seems clear to us, will be an increasing part of financial architecture very broadly and possibly portfolios moving forward.”
“Not only is there news in the US about the bitcoin situation, but we have a digital currency rollout in China with so-called “red packages.
Tesla chief Elon Musk has long been a fan of cryptocurrencies, but Tesla’s hard currency investment came as a surprise that set a rocket under the market.
After Musk listed it on Twitter, even dogecoin, a crypto-currency joke with a dog as its symbol, saw its value turbocharged. According to CoinMarketCap, it has jumped by 13pc in the last day.
On Tuesday, China’s Feitian Technologies Co Ltd, which makes digital payments technology, grew 4.47pc.
Beijing will issue a digital currency worth 10 million yuan ($1.55 million) to citizens that can be used beginning on Thursday during the Chinese New Year holiday, domestic media announced.
Furthermore, during the week-long holiday, Chinese are expected to send billions of yuan to each other through chat apps such as WeChat, digital versions of traditional ‘red packet’ envelopes filled with cash.