Bitcoin Reaches Record High After Tesla Buy-In

Bitcoin (BTCUSD) hit a new record high of over $48,000 after a $1.5 billion investment in the cryptocurrency by Tesla. 

From Monday morning, Bitcoin rose by more than 20% to today’s high. Tesla was up by 1.2% over yesterday’s close. Tesla CEO Elon Musk has been a strong supporter of Bitcoin and other cryptocurrencies, including Dogecoin. Tesla (TSLA) joins payment company Square (SQ) as a major investor in the cryptocurrency.

In addition to the news of the Tesla investment, the company’s annual report confirmed plans to add Bitcoin as a payment method for Tesla cars. Bitcoin is finding growing acceptance in the private sector, with PayPal (PYPL) accepting the digital token in its online wallet, as well as planning to add Bitcoin support to the PayPal Venmo payment system by early 2021.

Bitcoin still has a way to go before it has the same credibility as fiat currencies like the dollar. While Tesla’s investment accounts for 8% of the company’s current reserves of cash, it is only 0.05% of the overall cash reserves held by S&P500 (USA500) members. Additionally, only 1.3% of crypto transactions processed from January through April of 2019 were through retail merchants. Some of the problems facing crypto acceptance in general, and Bitcoin reception in particular, include regulatory issues, unreliable confirmation speed, and the emergence of fiat currencies in digital form.

Ethereum Follows Behind Bitcoin to Reach Record High 

Bitcoin’s rise has been followed closely by that of Ethereum (ETHUSD), which is the second-largest cryptocurrency by market capitalization. The altcoin hit a record price of over $1800 on Monday. This came on the same day that CME (CME) group, an exchange operator, launched its first Ethereum futures contract. 

Although the crypto has backing by major companies such as Tesla, Square, and PayPal it is still unsure whether Bitcoin will keep going up or if it will crash back down.