Tesla said in a filing the decision was part of its broad investment policy as a company and was aimed at diversifying and maximizing its returns on cash. It said it had invested an aggregate of $1.5 billion in bitcoin under the changed policy and could “acquire and hold digital assets from time to time or long-term”.
Bitcoin jumped to a record high of almost $45,000 on Monday after Tesla Inc disclosed it had invested around $1.5 billion in the digital currency and expects to begin accepting payment for its cars and other products with it in the near future.
Bitcoin hit $44,795.20 around 1325 GMT, before cooling slightly to $44,207.95.
The cryptocurrency is up by around 50 percent since the start of the year.
“This is probably one of the biggest developments for the cryptocurrency industry,” noted Fawad Razaqzada, analyst at ThinkMarkets.
“Tesla is going to be a major player in the auto industry and if it starts accepting bitcoin as a form of payment, it will give the digital currency further legitimacy.”
Tesla’s announcement, in a US Securities and Exchange Commission document, is a sign of confidence in the cryptocurrency that regulators are concerned could be used for illegal transactions.
“As more and more companies start accepting bitcoin, this will only lead to further increases in demand in a market which is limited in supply,” Razaqzada added.
“Therefore, the long-term outlook on bitcoin remains bullish even if it is starting to look quite expensive in fiat currency terms.”
The electric carmaker unveiled the investment ten days after its chief executive Elon Musk drove up the cryptocurrency’s price by adding a “#bitcoin” tag on his Twitter profile page
Tesla said in a filing the decision was part of its broad investment policy as a company and was aimed at diversifying and maximizing its returns on cash. It said it had invested an aggregate $1.5 billion in bitcoin under the changed policy and could “acquire and hold digital assets from time to time or long-term”.
Reuters reported that “Analysts said the move by one of the world’s best-known companies was liable to prove a game changer for bitcoin.
A well-known supporter of bitcoin, Chief Executive Officer Elon Musk has been weighing in regularly over the past week to a frenzy in retail investment, also driving up shares in meme-based digital currency dogecoin and shares of U.S. video game chain GameStop
“He’s now putting his money (shareholders’) where his mouth is,” Markets.com analyst Neil Wilson said.
“But given his recent comments – and adding #Bitcoin to his Twitter bio on January 29th – it also raises a real question about possible market manipulation.”
Musk said a week ago that bitcoin was “on the verge” of being more widely accepted among investors and in December asked if it was possible to do large transactions in the currency.
Vice president of market intelligence at cryptocurrency research and data firm Messari Eric Turne said “I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move,”
“One of the largest companies in the world now owns Bitcoin and by extension, every investor that owns Tesla (or even just an S&P 500 fund) has exposure to it as well,” he said.
Bitcoin, which has set new record highs in recent months after a rollercoaster ride over the past decade, has also drawn support from major financial institutions this year. The world’s biggest money manager Blackrock recently changed a handful of investment mandates to allow some of its funds to invest in the currency.