In this photographic illustration, a visual representation of the digital cryptocurrency, Bitcoin is shown in front of the Bitcoin course chart on February 9, 2021 in Paris, France.
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The price of Bitcoin topped $ 50,000 for the first time in history on Tuesday, and continued its strong growth as major companies appear to be heating up cryptocurrencies.
According to Coin Metrics data, the world’s largest digital currency by market value rose more than 3% to an all-time high of $ 50,389 at 7:32 a.m. ET.
Bitcoin has gained momentum from the news of big companies like Tesla, Mastercard and BNY Mellon heating up in cryptocurrencies. Tesla last revealed that it had bought Bitcoin worth $ 1.5 billion and plans to accept the digital currency as payment for its products, while Mastercard said it would open its network to some digital currencies. PayPal and BNY Mellon have also made great strides in supporting cryptography.
Tesla’s use of corporate cash to buy bitcoins sparked speculation about whether other major companies would follow suit. Last week, Uber CEO Dara Khosrowshahi told CNBC that the company had debated but “quickly dismissed” the idea of buying bitcoin. However, the firm is considering whether to accept cryptocurrencies as payment.
These developments have led some crypto investors to believe that the last ball run is different from previous concentrations. Bitcoin soared to nearly $ 20,000 in late 2017 before losing more than 80% of its value the following year. Bitcoin believers say that while 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 company MicroStrategy, told CNBC’s “Street Signs Asia” program on Tuesday. “It used to be dominated by leveraged retailers … in heavily leveraged international markets.”
MicroStrategy and Jack Dorsey’s fintech firm, Square, hit the headlines last year after taking on the unusual strategy of using corporate cash to buy bitcoin.
“I think from March 2020, you saw institutions start to arrive and I think in 2021 you will see this trend continue,” Saylor added. “There are bitcoin enthusiasts as a medium of exchange … but I personally think the compelling use case is a value proposition.”
MicroStrategy has seen its stock price multiply sevenfold since it first bought Bitcoin in August. The company announced Tuesday that it would offer $ 600 million in convertible bonds to buy more bitcoins. It has been speculated that MicroStrategy offered a plan to buy Tesla’s bitcoin after an exchange between Saylor and Elon Musk on Twitter about making “big 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. Economists like Nouriel Roubini say that bitcoin and other cryptocurrencies have no intrinsic value. And a recent Deutsche Bank poll said investors view bitcoin as the most extreme bubble in the financial markets.