TOKYO, Feb. 9 (Reuters) – Bitcoin expanded earnings to an all-time high on Tuesday as, following the afterglow of Tesla Inc’s investment in the cryptocurrency, investors believed it would become a mainstream asset class for businesses and money managers alike.
Bitcoin has more than doubled in two months as institutional investors look for alternative wealth stores and retailers join the wave. Monday’s jump after Tesla’s announcement was the largest daily increase in more than three years.
It traded at a record high of $ 48,216 late the Asian afternoon on Tuesday. Rival cryptocurrency ethereum had hit a record high of $ 1,784.85 in the early morning.
Shares of companies providing trading platforms for bitcoin and the technology to ‘mine’ the cryptocurrency soared in China, South Korea and Australia, and major companies making chip makers, such as SK Hynix, also rose.
The US dollar fell against most currencies.
Analysts come from Tesla’s announcement that it had bought $ 1.5 billion worth of bitcoin and that it would cost the cryptocurrency as payment for cars is part of a larger shift as companies and large investment houses follow small traders in the asset.
“You can now buy a Tesla with bitcoin, but I wouldn’t recommend doing that,” said Michael Bucella, partner at crypto investment firm BlockTower on CNBC. “We are in a position where these are the earliest stages of an allocation to bitcoin from the institutional and business community.”
Bitcoin is already up 62% this year, on top of a 300% rally last year, as investors look for alternatives to the greenback amid the US Federal Reserve’s 0% interest rates.
Central bankers and regulators, particularly in China, are also beginning to embrace the issuance of their own digital currencies for everyday use, in a significant break from the conventional workings of global finance.
“Digital currencies, it seems clear to us, will become an increasingly important part of the broader financial architecture and potentially future portfolios,” said Ben Powell, APAC chief investment strategist at BlackRock’s Investment Institute on CNBC.
“Not only is there news in the US about the bitcoin situation, but in China we have a rollout of China’s digital currency with so-called ‘red packets’.”
Tesla boss Elon Musk has long been a fan of cryptocurrency – he’s talked to them online – but Tesla’s investment in hard currency came as a surprise that put a rocket under the industry.
Even dogecoin, a joke cryptocurrency with a dog as a symbol, has seen its value increase after Musk mentioned it on Twitter. According to CoinMarketCap, it is up 13% in the past day.
China’s Feitian Technologies Co Ltd, which makes technology for digital payments, rose 4.47% on Tuesday.
Beijing will spend 10 million yuan ($ 1.55 million) in digital currency on residents that can be used on Thursday during the Chinese New Year holiday, domestic media reported.
In addition, the Chinese are expected to send billions of yuan to each other over the week-long holiday via chat apps like WeChat – digital versions of traditional ‘red package’ envelopes filled with cash. ($ 1 = 6.4493 Chinese yuan renminbi) (Written by Stanley White)