Bitcoin Tesla
Telsa Inc says it will begin accepting Bitcoin as a form of payment. Bitcoin prices jumped 10% to $42,595 on Monday after Tesla announced it has invested $1.5 billion in the cryptocurrency. Image Credit: Reuters / File

New York: Bitcoin surged to an all-time high after Telsa Inc. said it's invested $1.5 billion and will begin accepting the cryptocurrency as a form of payment. Prices jumped 10 per cent to $42,595 as of 12:57pm in London.

Tesla made the announcement as part of an update to its investment policy, according to a filing.

It's another sign that the cryptocurrency is gaining widespread traction as a type of investment. Enthusiasts often tout the digital asset as a hedge against inflation and store of value in a world awash with stimulus and rampant central-bank money printing.

"If retail and institutional interest continues to grow over the next month, Bitcoin could target the $45,000 level," said Edward Moya, a senior market analyst at forex broker Oanda Corp.

Bitcoin is back near $40,000 on the heels of a global market rally as investors grow increasingly confident in reflation and fresh U.S. stimulus.

The world's largest cryptocurrency was up 1.1% to $39,012 as of 9:57 a.m. in London after briefly surpassing $40,000 on Saturday. It's now about 7% below an all-time high set in early January.

13%

Bitcoin's current free float level, its lowest point since 2014. Free float means how many of these tokens are available for trade

Reclaiming lost ground

After a brief dip this month, Bitcoin is climbing once again as enthusiasts tout the digital asset as a hedge against inflation and store of value in a world awash with stimulus and rampant central-bank money printing. Prominent economists including - former US Treasury Secretary Lawrence Summers - have raised concerns that President Joe Biden's $1.9 trillion virus relief package may risk overheating the economy.

Bitcoin's free float, a measure of how many tokens are available to trade, has fallen to 13 per cent of supply, the lowest since 2014, according to Chainanalysis. "This suggests that Bitcoin available to buy remains scarce despite record prices," wrote Philip Gradwell, chief economist at the blockchain research firm.

It's also possible that cryptocurrencies are benefiting from all the free publicity from celebrities lavishing attention on Dogecoin, a Shiba-Inu themed joke coin. Over the weekend, Billionaire Elon Musk, rapper Snoop Dogg and Kiss bassist Gene Simmons sent several Dogecoin tweets and memes, pushing prices to a record.

Dogecoin rose as high as 8.2 US cents before falling back to about 7 cents, according to pricing data from CoinGecko. The token has a market value of about $9 billion, making it the 10th biggest cryptocurrency.

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