Bitcoin has smashed through the $US50,000 ($A64,000) barrier for the first time ever as more companies move to invest in the cryptocurrency.
The digital coin’s value has climbed more than 66 per cent this year, crossing the $US30,000 ($A39,000) mark just after New Year’s Day and rising even further to $US40,000 ($A52,000) later that week. It’s price plunged by 25 per cent at the end of January but has rallied against the drop in value.
On Wednesday morning, bitcoin settled at $US48,500 ($63,000) and now has an estimated market value of $US916 billion ($A1.1 trillion).
Analysts have predicted that breaking through the $US50,000 ($A64,000) mark could spark further momentum from crypto investors buying up the digital coin, while others have warned that a massive crash could be looming.
Last week, Tesla boss Elon Musk made a blockbuster announcement that it had bought $US1.5 billion ($A1.9 billion) worth of bitcoin and planned to accept payments in the digital coin, following in the footsteps of PayPal which gave users the ability to buy and sell cryptocurrencies on its platform in October last year.
US investment bank Morgan Stanley is also considering adding bitcoin to its list of potential bets for investors via its investment arm, according toBloomberg News.
Meanwhile CNBC reported that Wall Street giant JPMorgan Chase admitted it will need to get involved in cryptocurrencies if enough clients express interest, after forecasting the digital coin could reach the lofty heights of $US146,000 ($A188,000), while Citi has predicted highs of $US318,000 ($A410,000) by the end of the year.
American merchant services and mobile payments company Square has also invested $US50 million ($A65 million) in buying more than 4700 bitcoins.
Even MasterCard has flagged that cryptocurrencies are becoming a more important part of the payments world.
“We are preparing right now for the future of crypto and payments, announcing that this year MasterCard will start supporting select cryptocurrencies directly on our network,” it wrote on its website.
Part of the appeal of bitcoin is the belief it can protect against inflation.
“The price and institutional adoption are exciting but I believe the bitcoin story is much bigger,” Mike Venuto, co-portfolio manager of the Amplify Transformational Data Sharing ETF, which invests in companies working on the blockchain technology that powers bitcoin told theNew York Post. “I still doubt we will ever buy coffee with bitcoin, but the path to currency separate from a sovereign has now been paved.”
Celebrities have also expressed public support for cryptocurrency included actresses Lindsay Lohan and Maisie Williams, and music legend Gene Simmons.
But Elon Musk has to be one of the most famous fans, although he recently warned people not to invest their life savings in cryptocurrencies, echoing the sentiment of the UK financial watchdog which cautioned that people risk losing all their money.
“There’s a good chance that crypto is the future currency of Earth, and it’s like … which one’s it going to be? Maybe it’ll be multiple,” Mr Musk said.
“It should be considered speculation at this point. So don’t go too far with the crypto speculation front.”
Sergey Nazarov, co-founder of Chainlink, one of the largest projects in the blockchain industry, toldFox Newsthat Tesla’s move into the cryptocurrency was bringing the digital coin into the mainstream.
“With the world’s richest man putting bitcoin on Tesla’s balance sheet, I think that institutions will have much more publicly acceptable justification to allocate to bitcoin,” Mr Nazarov said. “You have to understand, with this move, anyone who owns Tesla shares just received exposure to bitcoin. The normalisation of bitcoin that is taking place right now cannot be understated.”