PayPal and SpaceX founder Elon Musk has revealed that his electric car company Tesla has bought $1.5bn worth of bitcoin, causing the value of the cryptocurrency to reach record heights.
The news comes about a week after Musk said that he believed that the cryptocurrency was on the verge of breaking into traditional finance and a month after he’d said he’d be open to the idea of getting paid in bitcoin, Forbes reported.
The news that Tesla has invested heavily in bitcoin saw the price of the cryptocurrency jump by 17% to a record $44,220 high, the BBC reported.
Tesla had previously stated in January that it would update its investment policy and that it now wished to invest in “reserve assets” such as digital currencies, gold and gold exchange-traded funds.
Musk himself has been on a bit of a cryptocurrency Twitter spree lately, tweeting and drumming up a buzz about bitcoin and other cryptocurrencies such as dogecoin, which jumped 50% after his endorsement.
Bitcoin and other cryptocurrencies have reached record levels over the last year, encouraging celebrities such as Game of Thrones actor Maisie Williams to invest in the digital currency.
There are several reasons behind the growing popularity of bitcoin and other cryptocurrencies.
One is that its decentralised nature has given it a reputation of being an investment akin to gold – safe, valuable and rare – which people tend to invest in during times of turmoil.
However, an editorial in the Financial Times recently warned that bitcoin’s reputation as a safe haven might be more illusion than fact, citing how the value of the digital currency has been on a roller-coaster for years.
Investors could have also been encouraged by respected payment giant PayPal announcing in October that its American customers can now trade cryptocurrencies like bitcoin directly on the app. Several other FinTech companies like challenger bank Revolut offer similar services.
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