Bitcoin’s (BTC-USD) price reached a new record Tuesday morning, surging almost 20% and crossing $47,000 (£34,123), a day after Tesla (TSLA) announced it had invested $1.5bn in the cryptocurrency. Some analysts have estimated the price could hit $50,000 by the end of the week.
“The crypto digital king recorded another all-time high today. It seems like the bull rally is in full swing now, and nothing is going to stop the bitcoin price from touching the $50,000 price level,” noted Naeem Aslam, chief market analyst at AVATrade.
Simon Peters, cryptoasset analyst at multi-asset investment platform eToro had also earlier said that “with this kind of endorsement from a multi-billion dollar company, it's likely the price will hit $50,000 by the end of the week.”
Aslam also said “there is no doubt” the rally was driven by news that PayPal (PYPL) will allow users to use bitcoin on its platform, with Tesla’s news taking “things to a new territory.”
“This is because now we are thinking of supply shortage issues for bitcoin because of massive demand. Why is that? Well, the answer is in the low-interest rate. Companies are holding big cash piles in their bank account, which is not earning them much at all. These cash rick companies do not know what they should do with their cash,” he explained.
He added that while Tesla's investment in bitcoin is tiny compared to its market cap, he said if the strategy becomes mainstream, with cash-rich companies like Apple and Facebook following suit, “we could see some serious cash purchasing bitcoin, and that can knock the supply equation out of its place.”
Meanwhile, the price of dogecoin (DOGE-USD) has also surged in recent weeks after Tesla CEO Elon Musk began tweeting about it. The rise has coincided with a surge of populism in financial markets around the world.
A survey published last week showed almost two-thirds of UK investors intend to buy bitcoin in 2021 and well over half expect its value to increase to $60,000.
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