Bitcoin rose above $50,000 on Tuesday to a new record high, building on a rally fuelled by signs that the world’s biggest cryptocurrency is gaining acceptance amongst mainstream investors.
Bitcoin hit a new high of $50,602, and was last up 3.3% at $49,537. It has risen around 72% so far this year, with most of the gains coming after electric carmaker Tesla said it had bought $1.5 billion in bitcoin.
It also said it would accept the currency as payment.
But Tesla was only the latest in a string of large investments that have vaulted bitcoin from the fringes of finance to company balance sheets and Wall Street dealing desks, as U.S. firms and traditional money managers have started to buy the cryptocurrency.
The rush in 2021 by retail and institutional investors comes on top of a 300% rise last year as investors search for alternatives to the dollar because of the U.S. Federal Reserve’s 0% interest rates. It traded at a few hundred dollars only five years earlier.
What’s more, analysts suggest bitcoin’s limited supply could boost further gains for the virtual asset and that’s while the narrative of bitcoin becoming the digital gold gains traction.
JPMorgan said in January that bitcoin emerged as a rival to gold and could trade as high as $146,000 if it becomes established as a safe-haven asset. That could mark a new dawn for the digital currency after years as a play for speculators and retail punters.
Bitcoin’s liquid supply is continuing to decrease, as investors increasingly acquire and “hodl” the asset for the long term. “Hodl” is crypto slang for the act of an investor holding the asset instead of selling it.
Meanwhile, smaller cryptocurrency ethereum edged 1.1% higher, just shy of its record high price of $1,874.98.