Bitcoin (XBT) hit a high of more than $48,000 on Tuesday after Tesla (TSLA) reported a $1.5 billion investment in the cryptocurrency and said it could soon be used to buy its electric cars.
Bitcoin was up some 5% Tuesday afternoon, while the US dollar index was down 0.6%.
Tesla isn’t the first company to dabble in bitcoin, but it’s definitely the most prominent one: A vote of confidence from the richest man in the world, Telsa CEO Elon Musk, is quite the endorsement.
“As more and more companies start accepting bitcoin, this will only lead to further increases in demand in a market which is limited in supply,” wrote Fawad Razaqzada, analyst at ThinkMarkets, in a note to clients.
“Bitcoin is becoming an alternative asset,” said Brad Bechtel, global head of FX at Jefferies. “It’s not correlated to anything else in the market.”
And that makes it an attractive asset to add to a portfolio, Bechtel said.
That’s pretty bullish for the long-term bitcoin outlook, even as some, notably Bank of America, have called the crypto rally “the mother of all bubbles.”
But don’t turn all your hard-earned dollars into bitcoin just yet.
The US dollar is the world’s reserve currency, meaning that companies, countries and central banks are keeping it in their accounts. It’s also the