In this photo illustration, a visual representation of the digital cryptocurrency, Bitcoin can be seen in Paris, France on February 9, 2021, ahead of the Bitcoin rate graph.
Chesnot | Getty Images
Bitcoin’s price topped $ 50,000 for the first time in history on Tuesday and continued its rapid rally as large corporations appear to warm up to cryptocurrencies.
The world’s largest digital currency by market value rose more than 3% to an all-time high of $ 50,487 at around 7:30 a.m. ET, according to Coin Metrics.
Bitcoin has received a boost from news from big companies like Tesla, Mastercard, and BNY Mellon showing support for crypto. Tesla announced last week that it had bought $ 1.5 billion worth of Bitcoin and plans to accept the digital coin as payment for its products, while Mastercard said it would open its network to some digital currencies. PayPal and BNY Mellon have also taken huge strides to support crypto.
Tesla’s use of corporate funds to buy Bitcoin sparked speculation about whether other large companies would follow suit. Uber CEO Dara Khosrowshahi told CNBC last week that the company had discussed the idea of buying Bitcoin but “quickly rejected” it. However, the company is considering accepting cryptocurrencies as a form of payment.
These developments have led many crypto investors to believe that the recent Bull Run is different from past rallies. 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 driven 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 international markets with a lot of leverage.”
MicroStrategy and Jack Dorsey’s fintech firm Square made headlines last year after pursuing an unusual strategy of using corporate money to buy bitcoin.
“I think institutions have been added from March 2020 and I think this trend will continue into 2021,” added Saylor. “There are enthusiasts out there for Bitcoin as a medium of exchange … but I personally believe that the compelling use case is a store of value.”
Since the first Bitcoin purchase in August, MicroStrategy’s share price has increased more than sevenfold. The company announced Tuesday that it would offer $ 600 million in convertible bonds to buy more bitcoin. It has been speculated that, following an exchange between Saylor and Elon Musk on Twitter, MicroStrategy offered a draft for Tesla’s Bitcoin purchase via “large transactions” in the cryptocurrency.
Still, skeptics view Bitcoin as a speculative asset and fear that it might be one of the largest market bubbles in history. Economists like Nouriel Roubini say that Bitcoin and other cryptocurrencies have no intrinsic value. According to a recent survey by Deutsche Bank, investors view Bitcoin as the most extreme bubble in the financial markets.