Bitcoin notches up another record high amid Tesla-inspired rally
The rally in the price of Bitcoin, seemingly spurred by news of a US$1.5bn investment into the cryptocurrency by electric car maker Tesla Inc (NASDAQ:TSLA) on Monday, showed no signs of letting up on Tuesday morning.
At around 7am GMT on Tuesday morning, Bitcoin hit a record high of US$48,042, although as the morning wore on the price slipped back slightly to around US$46,240 just before midday.
Tesla gave the crypto a further endorsement yesterday when it said it is also planning to accept Bitcoin as a form of payment for its cars in the future, which may feel with provide Bitcoin with a large legitimacy boost of a mainstream form of payment rather than simply as a speculative investment.
Some analysts have also predicted that Bitcoin’s surge could go further on the back of Tesla’s endorsement.
“Tesla’s decision to invest US$1.5bn in Bitcoin is the kind of corporate support that bulls will latch on to and could see US$50k taken out quickly”, said Markets.com’s Neil Wilson.
The analyst also pointed out that Tesla’s investment was “the same as Tesla earned in regulatory tax credits from the US last year”, which may draw some accusations of “taxpayer money being spaffed on a speculative investment in cryptocurrency”.
Meanwhile, AJ Bell’s Laith Khalaf warned that UK investors could be “playing Russian roulette with their money on the cryptocurrency markets” if they followed Tesla’s lead.
“There are a number of concerning findings from our research. Not only are many consumers buying cryptocurrencies without having an ISA, pension, or savings account in place, there also seems to be a significant misunderstanding of the risks involved. 30% of cryptocurrency investors are not willing to lose any of the money they’ve invested, which suggests they lack an appreciation of the potential downside of their investment”, Khalaf said.
“The unpredictability of the future of cryptocurrencies means putting money into Bitcoin is more speculation than investment. In ten years’ time, it’s possible the price of Bitcoin will be significantly higher than it is now, it’s also possible it will be close to worthless. It’s such a new and evolving market that no one can predict with any confidence which one of these scenarios, or any in between, might prevail”, the analyst added.