TOKYO, February 9 (Reuters) – Bitcoin extended earnings on Tuesday to a record high, as the aftermath of Tesla Inc’s investment in the cryptocurrency made investors think it would become a common asset class for companies and money managers.
Bitcoin has more than doubled in two months as institutional investors look for alternative stores and retailers catch the wave. Monday’s jump after Tesla’s announcement was the biggest daily increase in more than three years.
It traded to a record high of $ 48,216 in the late Asian afternoon on Tuesday. Rival cryptocurrency ethereum hit a record high of $ 1,784.85 early in the morning.
Shares in companies that provide trading platforms for bitcoin and technology to “mine” the cryptocurrency have increased in China, South Korea and Australia, and large computer chip makers like SK Hynix have also risen.
The US dollar fell against most currencies.
Analysts estimate that Tesla’s announcement that it bought $ 1.5 billion in bitcoin and that it would accept cryptocurrency as payment for cars is part of a bigger change as companies and large investment houses follow small dealers in search of the active.
“While you can now buy a Tesla with bitcoin, I would not suggest doing so,” said Michael Bucella, a partner at the crypto investment firm BlockTower at CNBC. “We are in a position where these are the first phases of an allocation for bitcoin from the institutional and corporate community.”
Bitcoin has already risen 62% this year, in addition to a 300% rise last year, as investors seek alternatives to the dollar because of the U.S. Federal Reserve’s 0% interest rates.
Central bankers and regulators, especially in China, are also beginning to embrace the issuance of their own digital currencies for daily use, in a major break from the conventional workings of global finance.
“Digital currencies, it seems clear to us, will be an increasingly large part of the financial architecture broadly, and potentially portfolios are moving forward,” Ben Powell, chief investment strategist for APAC at the BlackRock Investment Institute, told CNBC .
“There is not only news in the United States about the bitcoin situation, but in China we have a launch of the Chinese digital currency with the so-called ‘red packages'”.
Tesla boss Elon Musk has long been a fan of cryptocurrencies – he talked about them online – but Tesla’s investment in hard currency was a surprise that put a rocket under the industry.
Even dogecoin, a joke cryptocurrency with a dog as a symbol, saw its value increase after Musk mentioned him on Twitter. It jumped 13% the day before, according to CoinMarketCap.
China’s Feitian Technologies Co Ltd, which makes digital payments technology, rose 4.47% on Tuesday.
Beijing will issue 10 million yuan ($ 1.55 million) in digital currency to residents who can be used during the Chinese New Year holiday starting on Thursday, national media reported.
In addition, the Chinese are expected to send billions of yuan to each other during the week-long holiday through chat apps like WeChat – digital versions of traditional ‘red packet’ envelopes full of cash. ($ 1 = 6.4493 yuan Chinese renminbi) (written by Stanley White)