"Bitcoin powers towards $50,000 as Tesla takes it mainstream"

" \n Bitcoin was fast approaching the $50,000 mark on Tuesday as the afterglow of Elon Musk-led Tesla\u2019s investment in the cryptocurrency had investors reckoning it may become a mainstream asset class for both corporations and money managers. \n \n\n \n The most popular cryptocurrency has gained 1,150% from March 2020 lows as institutional investors search for alternative wealth stores and retail traders ride the wave. It traded at a few hundred dollars only five years back. \n \n\n \n Monday, it leapt 20% after Tesla announced it had a $1.5 billion investment and that it would eventually take the cryptocurrency as payment for its cars. That was its largest daily rise in more than three years. \n \n\n \n The price of one bitcoin climbed to a peak of $48,216 -- almost enough to buy one of the best-selling Tesla vehicles, Tesla Model Y SUV. Rival cryptocurrency ethereum struck a record high of $1,784.85 on Tuesday. \n \n\n \n Musk, a well-known supporter of cryptocurrencies, foresees accepting the currency as a payment for Tesla cars and analysts reckon this is a larger shift as companies and big investment houses follow small traders into the asset. \n \n\n \n \u201cBitcoin is definitely capturing investors\u2019 attention -- I get more and more questions about it,\u201d said Marija Vertimane, senior strategist at State Street Global Markets. \n \n\n \n \u201cFrom a practical point of view, using bitcoin to buy anything \u2013 Tesla cars \u2013 would be still extremely difficult given its excessive volatility.\u201d \n \n\n \n Bitcoin\u2019s volatility has been a hindrance for some serious investors and a sticking point in using it for transactions. Realised volatility, or daily price swings measured in terms of closing prices for Bitcoin over the past 90 days was at 72% compared with 16% for the S&P 500 stocks index and 6% for the euro currency. \n \n\n \n What\u2019s more, with bitcoin\u2019s value tripling in the past three months, analysts raised questions over how its volatility would affect someone buying a Tesla car in bitcoin. \n \n\n \n \u201cUnless the price of bitcoin stabilizes, either bitcoin\u2019s price falls drastically and you end up having won a Tesla in a lottery, or its price triples and you end up paying your Tesla far too expensive,\u201d said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. \n \n\n \n For example, if someone bought a Tesla Model 3 for one bitcoin on Sunday - when it traded for $38,000 - the same car could be bought for just 0.8 bitcoin on Tuesday, when the cryptocurrency traded at $46,413 as of 1145 GMT. \n \n\n \n \u201cEarliest phases\" \n \n\n \n Billionaire Musk has long been a cryptocurrency fan - he has talked them up online - but Tesla\u2019s hard currency investment came as a surprise that has put a rocket under the sector. \n \n\n \n \u201cRight now, it still seems like a bit of a leisurely pursuit, to acquire bitcoin. But I think by the end of the year, with the current rate of institutional flow inbound, it will become clear that this is a once-in-a-lifetime landgrab,\u201d said Jehan Chu, founder and managing partner at Kenetic, which invests in blockchain-related companies. \n \n\n \n Still, in BofA\u2019s January fund manager survey, bitcoin topped the list of \u201cmost crowded\u201d trades. Another survey, by Deutsche Bank, warned of price bubbles in the cryptocurrency. \n \n\n \n Bitcoin is already up 67% this year, on top of a 300% rally last year, as investors search for alternatives to the dollar because of the U.S. Federal Reserve\u2019s 0% interest rates. The dollar slid against most currencies on Tuesday. \n \n\n \n \u201cWe\u2019re in a position where these are the earliest phases of an allocation to bitcoin from the institutional and corporate community,\u201d said Michael Bucella, partner at crypto investment firm BlockTower on CNBC. \n \n\n \n In the ongoing digital wave, central bankers and regulators, particularly in China, are also starting to embrace issuing their own digital currencies for everyday use, in a major break from the conventional workings of global finance. \n \n\n \n Beijing will issue 10 million yuan ($1.55 million) worth of digital currency to residents that can be used during the Lunar New Year holiday starting on Thursday, domestic media reported. \n \n\n \n However, Vitor Constancio, former vice-president of the European Central Bank, wrote on Twitter that policymakers should focus on regulating cryptocurrencies and only develop digital currencies if they will help banks in their role of enabling credit creation. \n \n\n \n \u201cBitcoin prices should appear in \u2018commodities\u2019 lists, not in forex columns,\u201d he said. \n \n\n \n The Tesla news-led rally stretched beyond bitcoin. Shares of companies that provide trading platforms for bitcoin and the technology to \u201cmine\u201d the cryptocurrency surged in China, South Korea, and Australia, and big computer-chip making companies such as SK Hynix also rose. \n \n\n \n Even dogecoin, a joke cryptocurrency with a dog as its symbol, has seen its value turbocharged after Musk mentioned it on Twitter. It has jumped by 13% in the past day, according to CoinMarketCap. \n \n\n \n \u201cIt\u2019s really become popular culture and mainstream,\u201d Chu said. \u201cPeople are no longer asking why should I invest in bitcoin, they\u2019re having to defend why they\u2019re not.\u201d \n \n\n \n Graphic: Bitcoin breaks above $48,000 \n \n\n \n \n \n\n \n \n "

"Bitcoin powers towards $50,000 as Tesla takes it mainstream"

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