Cryptocurrency exchanges were battling technical issues this evening as trading volumes soared following the announcement that Elon Musk’s Tesla had invested $1.5bn in bitcoin.
The electric carmaker said it had bought Bitcoin for “more flexibility to further diversify and maximise returns on our cash.” Elon Musk’s company added it may invest a future portion of its assets in digital assets.
Bitcoin broke through $44,000, a new record, and is now trading up 14.5 per cent, while Ethereum jumped nearly nine per cent to $1,772, according to Coindesk.
Crypto exchange Kraken announced it had re-enabled signups after temporarily disabling them earlier in the day because of a surge in interest, while peers Gemini and Binance said they were dealing with some issues.
The price of the cryptocurrency has skyrocketed in the past year amid backing from the likes of Fidelity, Square and Paypal.
“Tesla is going to be a major player in the auto industry and if it starts accepting Bitcoin as a form of payment, it will give the digital currency further legitimacy,” Fawad Razaqzada, market analyst at ThinkMarket.
“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. Therefore, the long-term outlook on Bitcoin remains bullish even if it is starting to look quite expensive in fiat currency terms.”
Tesla’s investment comes just a week after founder and chief executive Musk indicated his support for the currency by adding #bitcoin to his Twitter bio. He has also recently talked up “dogecoin” in recent tweets.
It raises questions about whether Musk’s comments are possible market manipulation and he has been warned by the SEC about his tweets in the past.