Prices of the world’s oldest cryptocurrency, bitcoin, regained the $57,000 level on Wednesday after Tesla chief Elon Musk announced that people can now start buying the company’s electric vehicles using the digital asset.
According to Musk, Tesla is using internal and open-source software and operates bitcoin nodes directly. “Bitcoin paid to Tesla will be retained as bitcoin, not converted to fiat currency,” Musk tweeted. The payment facility has been rolled out only in the US as of now and will be made available outside of the country later this year.
Bitcoin, which was trading in the red below the $54,000 level spurted past the $57,000 level reacting to the Musk’s announcement. At 6.15pm IST, the digital asset was trading 3.2% higher at $56,840.72 after moving in a wide range of $53,611.02-57,239.10 over the past 24 hours, as per CoinGecko.
On 9 February, bitcoin had surged more than 18% in a day after the US electric-car maker Tesla had disclosed $1.5 billion holding in bitcoin and announced its plan to start accepting it as a payment.
Tesla’s latest announcement has come as a major boost for the cryptocurrency, which has been on a downwards slope over the past few days.
Bitcoin on Tuesday had slumped 5.8%, its worst single day fall in almost a month. “Experts believe that the drop can be partly attributed to traders closing their position before the expiration date of option-market kick, which will kick in on Friday,” said Ashish Singhal, chief executive officer and co-founder, CoinSwitch Kuber, a crypto investment platform.
The market’s drift lower over the past week has some market participants concerned about incremental downside price action as we head into April.
However, there are some bullish calls as well. “Aside from demand holding firm and price hovering around levels seen earlier in the month, market participants continue to see great promise in the fact that the supply of crypto assets on exchanges continues to dwindle week-by-week. As market participants often move coins onto exchanges to liquidate their holdings, it’s believed that a falling percentage of a coin’s circulating supply that are on exchanges is inherently bullish; it is indicative of market participants moving coins into cold storage and thus a less immediately marketable supply of coins available in the market. This creates a supply-demand imbalance that leads to a higher price,” global crypto exchange Kraken said in a note.
Meanwhile, other major cryptocurrencies such as ethereum, tether and cardano were trading up to 2% in the green.
“The newsmaker of the day is tether, which has become the third-largest cryptocurrency in the world by market cap, ahead of Binance coin and cardano. Moreover, it is important to note that despite the recent drop from an all-time high of $62,000, bitcoin is still up 700% compared with last year. In the new financial year, investors will begin strategizing their portfolio and we may see a surge in demand of crypto assets in the coming months,” said Shivam Thakral, CEO, BuyUcoin.