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Bitcoin price hits record high amid Elon Musk's US $1.5bn crypto move

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Jessica Yun
·2-min read
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BERLIN, GERMANY DECEMBER 01:  SpaceX owner and Tesla CEO Elon Musk arrives on the red carpet for the Axel Springer Award 2020 on December 01, 2020 in Berlin, Germany.  (Photo by Hannibal Hanschke-Pool/Getty Images)
SpaceX owner and Tesla CEO Elon Musk. (Photo by Hannibal Hanschke-Pool/Getty Images)

Bitcoin’s price (BTC) hit a new record high after electric vehicle maker Tesla announced it had purchased US $1.5 billion (AU $1.95 billion) of the digital currency and that it would start accepting it as payment in the future.

The move sent the popular cryptocurrency to a new high, breaching US $44,000 on Monday, a spike of 14 per cent following the announcement.

Meanwhile, Tesla (TSLA) shares rose by 2 per cent.

In a filing to the US Securities Exchange and Commission on Monday, the company wrote that its investment policy allowed the company to invest a portion of cash in “certain specified alternative reserve assets”.

“Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy,” the filing stated.

The company said it would also aim “to begin accepting bitcoin as a form of payment for our products in the near future”.

The massive investment, which represents some 10 per cent of Tesla’s cash reserves, is the largest corporate purchase of Bitcoin to date, beating Square’s US $50 million investment in October.

A chart of Bitcoin prices. (Source: Yahoo Finance)
Bitcoin prices have skyrocketed in the last six months. (Source: Yahoo Finance)

Experts have said that Tesla’s move will be a game-changer for Bitcoin, which has already gained momentum among institutional investors.

Market intelligence and cryptocurrency research and data firm Messari’s vice president, Eric Turner, said the record investment would spark a domino effect.

"I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move," he said.

"One of the largest companies in the world now owns Bitcoin and by extension, every investor that owns Tesla has exposure to it as well."

Elon Musk has been clear about his bullish views on cryptocurrency, releasing a series of tweets in the last couple of days espousing DogeCoin, which he’s described as “the people’s crypto”.

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This is despite Musk declaring on 2 February that he would be “off Twitter for a while”.

–with AAP

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