Bitcoin surged past $50,000 for a short period Tuesday as more companies have expressed interest in the cryptocurrency in recent weeks.
Boosted by Tesla’s $1.5 billion investment last week, the most popularly traded cryptocurrency achieved its all-time high of $50,645 in value shortly after 7:30 a.m., according to data from the digital currency exchange Coinbase, before dropping down to around $49,000 later in the morning.
Bitcoin’s value is largely driven by its decentralization, allowing for peer-to-peer trading online. Unlike national currencies, it is not maintained by a central trusted authority, as the dollar is by the Federal Reserve. Instead, transactions are recorded on a virtual ledger maintained by users.
Bitcoin’s value received a jolt with Tesla CEO Elon Musk’s investments and other influential proponents of the digital currency. Financial service companies such as Mastercard and BNY Mellon have also expressed interest in allowing customers to trade within the cyptocurrency market, further legitimizing the digital asset, NBC News reported.
Other leading technology companies such as Uber have considered buying the digital currency, though CEO Dara Khosrowshahi told CNBC that the company had “quickly dismissed” the idea. Still, the transportation company is weighing the options of receiving cryptocurrency as payment from users, as Tesla announced last week it would receive Bitcoin as a form of payment for its vehicles.
Michael Saylor, CEO of enterprise software firm MicroStrategy, told CNBC the rise of larger firms investing in cryptocurrency is a vast shift from the market that was once carried mostly by retail traders.
“I think that starting in March of 2020, you saw institutions start to arrive, and I think in 2021 you’re gonna see that trend continue,” Saylor added. “They’re enthusiasts for Bitcoin as a medium of exchange … but I personally believe that the compelling use case is a store of value.”
MicroStrategy and Twitter CEO Jack Dorsey’s fintech firm Square shocked the crypto market in 2020 after announcing they would use corporate spending dollars to acquire Bitcoin. In December, MicroStrategy announced it had purchased $1 billion in Bitcoin last year, and Dorsey’s Square company also said it had purchased $50 million, equating to 5,000 bitcoins in October.
Dogecoin, a token created as a joke in 2013 and based on the popular internet meme Doge, also showed how technology moguls can shake up the digital trading market with various cryptocurrencies. Musk tweeted Saturday, saying, “If major Dogecoin holders sell most of their coins, it will get my full support.” Following his tweet, the value of the coin dropped 37%.
If major Dogecoin holders sell most of their coins, it will get my full support. Too much concentration is the only real issue imo.
— Elon Musk (@elonmusk) February 14, 2021
Earlier this month, Dogecoin surged by over 50% in just 24 hours following the tech billionaire tweeting a single word: “doge.” Some investors have dubbed the cause-and-effect relationship the Tesla CEO has on the crypto market as the “Musk Effect.”
Tesla’s investment in Bitcoin was followed by the value increasing more than 10% last week. The value of the asset jumped from roughly $38,500 per coin on Feb. 7 to around $43,000 on Feb. 8, continuing upward, according to Coinbase data.
MicroStrategy’s share price has climbed over seven-fold since it first bought bitcoin in August. The company said Tuesday that it would offer $600 million in convertible bonds to buy more Bitcoin. The company already owns 72,000 units of the cryptocurrency.
Despite the large swaths of investments from several large technology companies to become heavily involved in crypto markets, skeptics see digital currency as a speculative asset.