TOKYO (JAPAN) – Bitcoin raced ahead with gains on Tuesday to a record high, thanks to Tesla Inc’s investment in the cryptocurrency garnering the attention of investors and announcing that it would become a mainstream asset class for corporates as well as money managers.
Monday’s leap after Tesla’s announcement was Bitcoin’s largest daily increase in more than three years.
It made a climb to a new peak of $48,216 late in the Asian afternoon on Tuesday, while its rival cryptocurrency ethereum had also reached a record high of $1,784.85 in the early morning.
Shares of companies providing trading platforms for bitcoin and the technology to “mine” the cryptocurrency saw a surge in China, South Korea, and Australia, and big computer chip making companies such as SK Hynix also rose.
The US dollar came down against most currencies.
Analysts saw Tesla’s announcement of buying $1.5 billion in bitcoin and that it would see the cryptocurrency as payment for cars as part of a larger shift amid companies and big investment houses following small traders into the asset.
Michael Bucella, partner at crypto investment firm BlockTower on CNBC, said, “While you can now buy a Tesla with bitcoin, I wouldn’t suggest doing so. We’re in a position where these are the earliest phases of an allocation to bitcoin from the institutional and corporate community.”
Bitcoin is already up 62% this year, on top of a 300% rally last year.
Ben Powell, APAC chief investment strategist at BlackRock’s Investment Institute, said on CNBC, “Digital currencies, it seems clear to us, are going to be an increasing part of financial architecture very broadly and potentially portfolios moving forward.”
“There isn’t just news in the US with the bitcoin situation, but in China we’ve got a rollout of China’s digital currency with so-called ‘red packets’.”
Tesla boss Elon Musk has long been a cryptocurrency fan, and has recurrently talked in praise of them online. However, Tesla’s hard currency investment came as a surprise.
Even dogecoin, a joke cryptocurrency with a dog as its symbol, has seen its value go up after Musk mentioned it on Twitter. It has jumped by 13% in the past day, according to CoinMarketCap.
China’s Feitian Technologies Co Ltd, which makes technology for digital payments, rose 4.47% on Tuesday.
Beijing will issue digital currency worth 10 million yuan ($1.55 million) worth to residents that can be used during the Lunar New Year holiday starting on Thursday, as reported by domestic media.
In addition, Chinese are likely to send each other billions of yuan during the weeklong holiday through platforms and chat apps such as WeChat, digital versions of traditional ‘red packet’ envelopes filled with cash.