Bitcoin’s price jumped sharply to an all-time high after Tesla revealed a big stake in the digital coin and said it would start accepting payments in bitcoin in exchange for its products.
The world’s largest cryptocurrency last traded 15% higher at $44,141, according to Coin Metrics. Bitcoin just finished a banner year with its price more than quadrupling in 2020.
Tesla announced Monday that it bought $1.5 billion worth of bitcoin, according to a filing with the SEC. The electric car maker said it bought bitcoin for “more flexibility to further diversify and maximize returns on our cash,” according to the filing. It added that it may invest future portion of its assets in digital assets.
The move also makes Tesla the first major automaker to accept bitcoin as payment.
Tesla’s stake in bitcoin “will have a ripple effect across corporations around the global,” Dan Ives, Wedbush’s analyst, said in a note. It is a “potential game changing move for the use of bitcoin from a transactional perspective.”
CEO Elon Musk has been talking up bitcoin as well as meme-inspired token “dogecoin” in recent tweets, which many believe drove the recent run-up in these assets.
Tesla’s investment in bitcoin is the latest sign that the volatile cryptocurrency is being widely embraced. Last year, Fidelity Investments, Square and PayPal all announced big moves in the space, allowing its customers to be involved in the digital asset.
Interest from high-profile investors such as Paul Tudor Jones and Stanley Druckenmiller also boosted the token. Many even believe bitcoin has the potential to replace safe-haven gold by some institutional investors.