Bitcoin surged past $50,000 on Tuesday morning, yet another record high for the original cryptocurrency. It marked the first time the digital coin had traded over $50,000. Bitcoin is the largest digital currency worldwide, and its market value rose over 3 percent on Tuesday, while the coin traded at $50,487. Later in the day, it lost some of its gains, trading at $48,760, still 0.2 percent higher than its previous close.
Many major investors seem to be cozying up to the cryptocurrency. Since last week, major firms such as Tesla, BNY Mellon, and Mastercard have been showing significant support for digital coins.
Tesla purchased $1.5 billion in bitcoin and has said it will be accepting the cryptocurrency as payment for its electric vehicles. Mastercard also said that it would open the doors of its network to some cryptocurrencies.
Tesla used corporate cash to buy its bitcoin, and the move sparked controversy over whether or not it would encourage other major corporations to follow in its heels.
In 2017, Bitcoin soared to a then-record of $20,000, then lost over 80 percent of its market value in 2018. Unlike crypto’s 2017 bubble, investors think the momentum is here to stay and say things are different this time. Retail speculation is said to have driven the 2017 bubble, whereas the current cryptocurrency frenzy is coming from institutional investors.
MicroStrategy CEO of enterprise, Michael Saylor, said in a CNBC interview, “I think bitcoin is a much more stable asset class today than it was three years ago. It used to be dominated by leveraged retail traders…on international markets with a lot of leverage.”
Last year, MicroStrategy, along with Square, used corporate cash to buy bitcoin.
Saylor also said, “I think that starting in March of 2020, you saw institutions start to arrive, and I think in 2021, you’re going to see that trend continue. They’re enthusiasts for bitcoin as a medium of exchange, but, I personally believe that the compelling use case is a store of value.”
Since it purchased bitcoin in August, MicroStrategy’s share prices have climbed more than several times their original prices. The company announced this week that it intends to purchase $600 million in convertible bonds.
Many skeptics still view bitcoin as nothing more than a speculative asset and expect another bubble to occur. Nouriel Roubini, a professor at NYU’s Stern School of Business and Chairman of economic consultant firm Roubini Macro Associates, said bitcoin’s fundamental value is worthless and is nothing more than a speculative asset. Deutsche Bank also said one of its surveys showed that investors see bitcoin as an “extreme bubble.”