In this photographic illustration, a visual representation of the digital cryptocurrency, Bitcoin is on display in front of the Bitcoin course chart on February 9, 2021 in Paris, France.
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Bitcoin’s price surpassed $ 50,000 for the first time in history on Tuesday, continuing its sharp rise as major companies appear to be warming up for cryptocurrencies.
The world’s largest digital currency by market value rose more than 3%, to a record high of $ 50,389 at 07:32 ET, according to data from Coin Metrics.
Bitcoin has gained momentum with news from big companies like Tesla, Mastercard and BNY Mellon adopting cryptocurrencies. Tesla last revealed that it bought $ 1.5 billion in bitcoins and plans to accept digital currency as payment for its products, while Mastercard said it would open its network for some digital currencies. PayPal and BNY Mellon also made major moves to support encryption.
Tesla’s use of corporate money to buy bitcoin has sparked speculation about whether other big companies would follow suit. Uber CEO Dara Khosrowshahi told CNBC last week that the company had discussed, but “quickly rejected” the idea of buying bitcoin. The company is, however, considering whether to accept cryptocurrencies as payment.
These developments have led some crypto investors to believe that the latest bullish run is different from previous bulls. Bitcoin soared to almost $ 20,000 in late 2017, before losing more than 80% of its value the following year. Bitcoin believers say that while the 2017 bubble was fueled by retail speculation, the current cycle is being fueled by demand from institutional investors.
“I think bitcoin is a much more stable asset class today than it was three years ago,” Michael Saylor, CEO of enterprise software company MicroStrategy, told CNBC’s “Street Signs Asia” program on Tuesday. “It used to be dominated by leveraged retailers … in international markets with a lot of influence.”
MicroStrategy and Jack Dorsey’s fintech firm Square made headlines last year after adopting the unusual strategy of using corporate money to buy bitcoin.
“I think that starting in March 2020, you saw institutions start to arrive and I think that in 2021 you will see this trend continue,” added Saylor. “There are bitcoin enthusiasts as a medium of exchange … but I personally believe that the attractive use case is a store of value.”
MicroStrategy has seen its stock price rise more than seven times since it bought bitcoin in August. The company announced on Tuesday that it would offer $ 600 million in convertible bonds to buy more bitcoin. There has been speculation that MicroStrategy offered a plan to buy Tesla bitcoins after an exchange between Saylor and Elon Musk on Twitter about making “big deals” with the cryptocurrency.
Still, skeptics see bitcoin as a speculative asset and fear that it may be one of the biggest market bubbles in history. Economists like Nouriel Roubini say that bitcoin and other cryptocurrencies have no intrinsic value. And a recent Deutsche Bank survey said investors see bitcoin as the most extreme bubble in the financial markets.