Bitcoin hits record high after Musk ploughs £1.1bn into cryptocurrency

Bitcoin was on the charge after Tesla snapped up £1.1billion of the cryptocurrency.

On another day of frenzied trading, bitcoin jumped 18 per cent to a record high of $44,869, with analysts predicting it could hit $50,000 by the end of the week.

The electric car maker’s shares also gained 2 per cent on the Nasdaq.

Maverick: Tesla boss Elon Musk sent the price of Bitcoin to a record high after the electric car firm invested £1.1bn in the cryptocurrency

But the decision to put Tesla cash into the cryptocurrency raised eyebrows, with observers describing the move as bizarre.

The electric car maker went to shareholders to raise a fresh £3.6billion back in December as founder and chief executive Elon Musk (pictured) said he wanted to ramp up production in China.

At the time Musk said: ‘We’re trying to spend money at the fastest rate that we can possibly spend it and not waste it. That’s our current plan. It’s quite hard to spend money without wasting it.’

In a stock market filing in the US, Tesla said it had ‘updated its investment policy’ and had been looking to invest in ‘reserve assets’ such as digital currencies, gold bullion or gold exchange-traded funds.

The company is not short of cash and has £15billion on the balance sheet to play with. Tesla also said it would allow customers to buy cars using the currency.

‘We expect to begin accepting bitcoin as a form of payment for our products in the near future,’ the company said.

Bitcoin can already be used as payment for many every day products like Starbucks coffee as well as in supermarkets such as Whole Foods, but it is not widely accepted for big ticket items.

Tesla cars are expensive with a top -of-the-range Model S costing around £60,000, although the cheapest models come in at a more affordable $28,000.

Tesla cars are expensive with a top -of-the-range Model S costing around £60,000, although the cheapest models come in at a more affordable $28,000.

Connor Campbell, analyst at Spreadex, said: ‘Musk has shown he is not fussed about responsibility to his investors. Buying into Telsa is buying into Musk as a person. But professional investors will be p****d off.’

Many believe that bitcoin could be heading for a slump this year as central bank’s around the world have vowed to crackdown on the cryto-currency.

Tesla also warned that investing in the currency could end in tears for the company and its investors. It said: ‘The prices of digital assets have been highly volatile.

‘The prevalence of such assets is a recent trend and their long-term adoption by investors, consumers and businesses is unpredictable. 

Their lack of a physical form and their reliance on technology for their creation may subject them to the threat of malicious attacks and technological obsolescence.

‘If we hold digital assets and their values decrease relative to our purchase prices, our financial condition may be harmed,’ Tesla said.

Referring to Tesla’s investment, Simon Peters, analyst at brokerage company Etoro, said: ‘If there were any doubters as to the mainstream acceptance of bitcoin, this surely must mark the end of any scepticism. 

Multiple other brands already accept bitcoin as payment, and we would imagine that other major companies will follow Tesla’s example.’

Bitcoin has a market cap of £700billion, meaning the electric car maker now holds 0.15 per cent of the cryptocurrency market.

Other major holders include hedge funds Tudor Investment Corporation and US billionaire Stanley Druckenmiller. Both are understood to own around 2 per cent of the market.

This post first appeared on Dailymail.co.uk