Bitcoin hits record highs as Tesla jumps in, but it's also great news for gold price
(Kitco News) It's a happy Monday for crypto investors as bitcoin surged to new record highs above $44,000 on the news that Tesla not only invested $1.5 billion in bitcoin but also said it would begin accepting the cryptocurrency as a form of payment.
"We expect to begin accepting Bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis," Tesla said in the securities filing.
Tesla said that its $1.5-billion investment would provide "more flexibility to further diversify and maximize returns on our cash," according to the company's filing on Monday.
But the Tesla announcement is great news for gold investors as well. The electric-car maker said that it updated its investment policy to allow not only investment in digital assets, but also in gold bullion and gold exchange-traded funds (ETFs).
The new policy now includes investment in "alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds, and other assets," the filing revealed.
Both bitcoin and gold saw a jump higher after the news broke Monday morning.
Bitcoin hit a new record high above $44,700, last trading up 12.27% on the day at $43,604, according to Kitco's aggregated charts. Meanwhile, April Comex gold futures were also up 1.20% and last trading at $1,834.80.
Tesla's investment into bitcoin could push bitcoin's prices to $50,000 and be the catalyst behind bitcoin's market cap expanding to $1 trillion, said Bloomberg Intelligence senior commodity strategist Mike McGlone.
"Tesla's disclosure that it's investing in Bitcoin and accepting the cryptocurrency for payment is a stepping stone similar to onboarding by PayPal in October, which points to about $50,000 as the next resistance target, in our view. The fear of missing out may be a driver as the benchmark crypto gains global appeal as a reserve asset, similar to gold," McGlone said on Monday.
On top of that, there is the declining bitcoin supply, added McGlone. "By 2025, the annual rate of Bitcoin supply vs. total coins outstanding should fall below 1%," he said.
A week ago, Tesla CEO Elon Musk said in an invitation-only audio-chat app Clubhouse that he is a bit "late to the party" when it comes to bitcoin. "I should have bought [bitcoin] eight years ago … I do at this point think bitcoin is a good thing. I am a supporter," he said.
In the meantime, Musk has been busy on Twitter, posting about crypto-related topics, including Dogecoin, which has surged 65% in 24 hours and hit a record high of $0.083745 on Sunday.
Snoop Dogg and Gene Simmons were also busy tweeting about Dogecoin.
Dogecoin was created in 2013 and is based on the popular "doge" meme at the time that portrays a shiba inu dog. The cryptocurrency was started as a joke but has gained popularity this year after receiving attention from a Reddit group called SatoshiStreetBets.
So … it’s finally come to this … pic.twitter.com/Gf0Rg2QOaF— Elon Musk (@elonmusk) February 7, 2021
?? Who let the Doge out ??— Elon Musk (@elonmusk) February 7, 2021
Super Bowl views expected at record lows as everyone plans to watch Dogecoin price movements insteadhttps://t.co/lbuzo04dZ5— Reddit Investors (@redditinvestors) February 7, 2021