Bitcoin peaks after $1.5 billion Tesla buy-in

The digital currency Bitcoin hit a new high on Monday. The jump was triggered by news that the electric car manufacturer Tesla had invested significantly in the digital currency and that it would accept it as a means of payment in the future.

The price of Bitcoin jumped 15% to $44,899 (€37,270) after the news broke. This beats the previous price record of $42,000, hit last month. 

In a filing with the US Securities and Exchange Commission (SEC), Tesla said it had invested $1.5 billion in Bitcoin.

"In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash," the filing said.

Therefore, according to Tesla, "we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future."

Carmaker will accept Bitcoin

Tesla will also "begin accepting Bitcoin as a form of payment for our products in the near future," the company said.

An admitted fan of cryptocurrencies, Tesla CEO Elon Musk tweets regularly about Bitcoin and other cryptos. Several recent tweets about the cryptocurrency Dogecoin sent those prices soaring as well. 

A week ago, Musk had said Bitcoin was "on the verge" of becoming more widely accepted within the investment sector.

Musk is popular with cryptocurrency investors, which is why his endorsements often boost prices.

Tesla could set the trend

"I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move,” Eric Turner, vice president of market intelligence at cryptocurrency research and data firm Messari, told Reuters.

"One of the largest companies in the world now owns Bitcoin and by extension, every investor that owns Tesla (or even just an S&P 500 fund) has exposure to it as well," he added.

After many years of volatility,  Bitcoin has smashed through several record highs in recent months. Major financial institutions are taking a second look at the cryptocurrency, long considered by many to be a fad. Blackrock, the world's largest money manager, also recently made it possible for some its funds to invest in Bitcoin.

The more institutes that accept the digital currency, the more likely it is to achieve stability in the long term, analysts have said.

kp/hg (Reuters, dpa)