Bitcoin’s price jumped sharply to an all-time high after Tesla revealed a big stake in the cryptocurrency and said it would start accepting payments in the digital coin for its products.
The world’s largest cryptocurrency popped 14% to $44180.3, for its best day since March, according to Coin Metrics. It hit an intraday record high of $44,762.4 after Tesla’s announcement. Bitcoin just finished a banner year with its price more than quadrupling in 2020.
In a filing with the Securities and Exchange Commission, Tesla announced Monday that it bought $1.5 billion worth of bitcoin for “more flexibility to further diversify and maximize returns on our cash.” It also said it may invest a future portion of its assets in digital assets and that it will accept bitcoin as payment for products “subject to applicable laws and initially on a limited basis.”
The move makes Tesla the first major automaker to accept bitcoin as payment.
Tesla’s stake in bitcoin “will have a ripple effect across corporations around the global,” Wedbush analyst Dan Ives said in a note. It is a “potential game changing move for the use of bitcoin from a transactional perspective.”
CEO Elon Musk has been talking up bitcoin as well as meme-inspired token dogecoin in recent tweets, which many believe drove the recent runup in these assets.
Tesla’s investment in bitcoin is the latest sign that the volatile cryptocurrency is being widely embraced. Last year, Fidelity Investments, Square and PayPal announced big moves in the space, allowing their customers to be involved in the digital asset.
Interest from high-profile investors such as Paul Tudor Jones and Stanley Druckenmiller also boosted the token. Many even believe bitcoin has the potential to replace safe-haven gold by some institutional investors.
“TSLA hasn’t historically been a company to shy away from publicity, so some will write off today’s announcement as a marketing stunt, but at $1.5 billion, it would be a pretty big stunt,” Bespoke Investment Group said in a note. “Also, while it’s easy to forget, TSLA is one of the largest companies in the world.”
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