Bitcoin shoots past $47,000 as Tesla announces plan to start accepting cryptocurrency

The largest cryptocurrency, bitcoin, surged to a record high of nearly $48,000 on Tuesday following the news that Tesla has invested $1.5 billion in the digital asset and expects to start accepting it as payment.

Bitcoin soared 23 percent to trade at $47,893, breaking an all-time high reached in early January. 

US electric car maker Tesla confirmed on Monday in its annual SEC (Securities and Exchange Commission) filing that it has acquired $1.5 billion worth of bitcoin, and said it may also accept the currency as a form of payment for its products in the near future.

That would make Tesla the first major automaker to accept bitcoin as payment. The company said it bought the bitcoin for "more flexibility to further diversify and maximize returns on our cash,” according to the filing.

Tesla founder Elon Musk said recently that while he's a bit “late to the party,” he is now a supporter of the digital currency.

“I should have bought [bitcoin] eight years ago … I do at this point think bitcoin is a good thing. I am a supporter,” Musk said in a chat on February 1.

Tesla shares were up more than two percent in premarket trading. The company warned investors of the volatility of bitcoin’s price in its SEC filing.

“There will be pullbacks, maybe even to retest the top of the flag as support,” popular crypto trader Scott Melker said on Twitter, adding: “But technically this is a confirmed breakout that should take $BTC to 63K eventually. Disclaimer – patterns rarely reach their targets, but the rules are the rules.”

Bitcoin enthusiasts point to the digital asset as a hedge against inflation and store of value as concerns are rising that US President Joe Biden’s $1.9 trillion virus relief package may risk overheating the economy.

Bitcoin’s free float, a measure of how many tokens are available to trade, has dropped to 13 percent of supply, which is the lowest since 2014, according to Chainanalysis. “This suggests that Bitcoin available to buy remains scarce despite record prices,” Philip Gradwell, chief economist at the blockchain research firm, was quoted as saying by Bloomberg.

Last week, hedge fund legend Bill Miller revealed plans of a $400 million bitcoin investment, saying he will increase his bitcoin exposure by plowing 15 percent of one of his portfolios to buy Grayscale BitcoinTrust shares. 

“If retail and institutional interest continues to grow over the next month, bitcoin could target the $45,000 level,” said Edward Moya, a senior market analyst at forex broker Oanda.

READ MORE: ‘Who let the Doge out?’ Musk’s favorite canine-crypto smashes another record high as celebrities jump on board

Analysts say another reason behind cryptocurrencies’ growth could be celebrities attracting attention to dogecoin. Over the weekend, Elon Musk, rapper Snoop Dogg and KISS bassist Gene Simmons sent several Dogecoin tweets and memes, pushing prices of the crypto to a record high.

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