TOKYO, Feb 9 (Reuters) – Bitcoin extended gains to a record high on Tuesday as the incidence of Tesla Inc.’s investment in the cryptocurrency led investors to calculate that it would become a major asset class for both companies and money managers.
Bitcoin has more than doubled in two months as institutional investors look for alternative wealth stores and retailers go through the tide. Monday’s jump after Tesla’s announcement was its biggest daily increase in more than three years.
On Tuesday it traded at a record high of $ 48,216 in the Asian afternoon. Ethereum of rival cryptocurrencies had hit a record high of $ 1,784.85 in the early hours of the morning.
Shares of companies providing bitcoin trading platforms and technology to “exploit” cryptocurrency increased in China, South Korea and Australia, and large computer chip manufacturing companies such as SK Hynix also increased .
The US dollar fell against most currencies.
Analysts estimate Tesla’s announcement that it had bought $ 1.5 billion in bitcoins and would take the cryptocurrency as car payments are part of a larger change as companies and large investment houses follow the small traders to the asset.
“While you can now buy a Tesla with Bitcoin, I wouldn’t suggest doing so,” said Michael Bucella, a partner at CNBC’s cryptocurrency investment firm BlockTower. “We are in a position where these are the early stages of an allocation to Bitcoin from the institutional and corporate community.”
Bitcoin has already risen 62% this year, in addition to a 300% rise last year as investors look for alternatives to the greenback due to 0% US Federal Reserve interest rates .
Central bankers and regulators, especially in China, are also beginning to issue their own digital currencies for everyday use, in a major break from the conventional operation of global finance.
“It seems clear that digital currencies will be a growing part of the financial architecture broadly and will potentially advance portfolios,” Ben Powell, chief investment strategist at APAC at BlackRock’s Investment Institute, told CNBC.
“Not only is there news in the United States about the situation of bitcoin, but in China we have a launch of the Chinese digital currency with so-called ‘red packages’.”
Elon Musk, the head of Tesla, has long been a fan of cryptocurrency (he spoke to them online), but Tesla’s investment in hard currency was a surprise that has put a rocket under the sector.
Even dogecoin, a joke cryptocurrency with a dog as a symbol, has seen its turbo-powered value after Musk mentioned it on Twitter. According to CoinMarketCap, it has jumped 13% in the last day.
Chinese company Feitian Technologies Co. Ltd., which manufactures technology for digital payments, rose 4.47% on Tuesday.
Beijing will issue 10 million yuan ($ 1.55 million) worth of digital currency to residents that can be used during the Chinese New Year holidays starting Thursday, national media reported.
In addition, the Chinese are expected to send billions of yuan during the week-long holidays through chat apps like WeChat, digital versions of traditional envelopes of “red packages” full of cash. ($ 1 = 6.4493 Chinese renminbi yuan) (Written by Stanley White)