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Bitcoin rises on JP Morgan fund talk as Tesla sells 10% holdings

Bitcoin price soared above $54,700 on Tuesday. Photo Illustration: Omar Marques/SOPA /LightRocket via Getty
Bitcoin price soared above $54,700 on Tuesday. Photo Illustration: Omar Marques/SOPA /LightRocket via Getty (SOPA Images via Getty Images)

Cryptocurrencies ticked up Tuesday morning amid news that JP Morgan (JPM) is gearing up to offer an actively managed bitcoin fund to certain clients.

The move would make it the largest and "unlikeliest US mega-bank to embrace crypto as an asset class," CoinDesk said.

It added that the fund could roll out as soon as this summer, citing sources familiar with the matter.

Meanwhile, Tesla (TSLA) announced $438m in net income for this quarter, with a $101m "positive impact" on profits from selling some of its bitcoin. It had put $1.5bn into the cryptocurrency earlier this year.

Watch: What is bitcoin?

On Twitter, CEO Elon Musk said: "Tesla sold 10% of its holdings essentially to prove liquidity of bitcoin as an alternative to holding cash on balance sheet."

He added that he had not sold any of the bitcoin he personally holds.

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Bitcoin (BTC-USD) ticked up 3.6% to trade at $54,453.15 (£39,212.53) while ethereum (ETH-USD) the second largest cryptocurrency in terms of market capitalization and volume, continued its rally.

Bitcoin rallied on Tuesday morning. Chart: Yahoo Finance
Bitcoin rallied on Tuesday morning. Chart: Yahoo Finance

It was up about 3.4% and trading at $2,541.972. It first crossed the $2,500 mark last week to hit an all-time high. Some analysts are expecting it will soon cross $3,000.

Even dogecoin (DOGE-USD), a joke token which has been volatile ever since fans decided to celebrate 'dogeday' last week, gained 3.7%.

"In the crypto space, we have a lot of optimism among investors and traders as they continue to see more naysayers folding their cards," said Naeem Aslam, chief market analyst at AvaTrade.

"JP Morgan’s massive announcement of offering bitcoin’s actively managed fund to their wealthy clients has assured traders that how wrong Wall Street banks were in criticizing bitcoin. These banks have no option but to offer digital assets to their client if they want to service them."

He added that "overall, this particular news has brought a lot of enthusiasm among investors who took the recent sell-off as an opportunity to add more digital assets to their portfolios."

"Having said that, we aren’t fully out of the woods yet, and this is because the bitcoin price needs to break above the next psychological resistance of $60,000 before traders can be certain that a move towards the $70,000 price is more likely."

Watch: What are the risks of investing in cryptocurrencies?