Bitcoin hit a record high of more than $50,000 on Tuesday, continuing its blistering rally as major companies appear to be warming to cryptocurrencies.
The world’s largest digital currency by market valuable rose more than 3 percent to an all-time high of $50,389 just after 7:30 a.m. ET, according to data from Coin Metrics.
Bitcoin has had a boost from news of large firms like Tesla, Mastercard and BNY Mellon warming to cryptocurrencies. Tesla last revealed it had bought $1.5 billion worth of bitcoin and plans to accept the digital coin as payment for its products, while Mastercard said it would open up its network to some digital currencies. PayPal and BNY Mellon have also made big moves to support crypto.
Tesla’s use of corporate cash to buy bitcoin sparked speculation over whether other major companies would follow suit. Uber CEO Dara Khosrowshahi last week told CNBC that the company had discussed but “quickly dismissed” the idea of buying bitcoin. The firm is however considering whether to accept cryptocurrencies as payment.
These developments have led some crypto investors to believe the latest bull run is different to rallies past. Bitcoin skyrocketed to nearly $20,000 in late 2017 before losing more than 80 percent of its value the following year. Bitcoin believers say that, whereas the 2017 bubble was driven 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 firm MicroStrategy, told CNBC’s “Street Signs Asia” program on Tuesday. “It used to be dominated by leveraged retail traders … on international markets with a lot of leverage.”
MicroStrategy and Jack Dorsey’s fintech firm Square hit the headlines last year after taking the unusual strategy of using corporate cash to purchase bitcoin.
“I think that starting in March of 2020, you saw institutions start to arrive and I think in 2021 you’re gonna see that trend continue,” Saylor added. “There’re enthusiasts for bitcoin as a medium of exchange … but I personally believe that the compelling use case is a store of value.”
MicroStrategy has seen its share price climb more than sevenfold since it first bought bitcoin in August. The company announced Tuesday that it would offer $600 million in convertible bonds to buy more bitcoin. There has been speculation that MicroStrategy offered a blueprint for Tesla’s bitcoin purchase after an exchange between Saylor and Elon Musk on Twitter about making “large transactions” with the cryptocurrency.
Still, skeptics see bitcoin as a speculative asset and worry it may be one of the biggest market bubbles in history. Some economists and investors say bitcoin and other cryptocurrencies have no intrinsic value, while others view bitcoin as the most extreme bubble in financial markets.
