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Billionaire entrepreneur Elon Musk sparked a Bitcoin frenzy this week after his company Tesla bought $1.5billion’s (£1.1billion) worth of the cryptocurrency. In a stock market filing, Tesla said it has “updated its investment policy” and is therefore looking to invest in “reserve assets” such as digital currencies, gold bullion or gold exchange-traded funds. The shock move drove the value of Bitcoin up to record highs after a turbulent month in January. Its value is now approaching the $50,000 (£36,000) mark, with the price currently sitting at around $47,000 (£34,000).<\/p>\n
Tesla added following its announcement: “Moreover, we expect to begin accepting Bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”<\/p>\n
David Sacco, an expert in cryptocurrencies from the University of New Haven, told Express.co.uk that the Tesla-inspired surge will continue as more companies will follow the lead of Elon Musk.<\/p>\n
He said: “I do think a lot of companies will start following Tesla’s lead because it is good marketing.<\/p>\n
“It gets you in the news, it makes you seem like you are a technologically oriented company, and there’s certainly demand for Bitcoin out there because of market euphoria right now.<\/p>\n
“I think there’s a lot of different ways companies are trying to capitalise on this, I would say don’t underestimate the market euphoria.”<\/p>\n
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He also backed Bitcoin to reach a million dollar value.<\/p>\n
Mr Sacco added: “Companies tend to do what other companies do, especially if something is seen to be effective.<\/p>\n
“Other companies will follow suit because they’ve seen the results.<\/p>\n
“There’s the scarcity associated with it, I think we are at the tip of the iceberg of people’s acceptance of it.<\/p>\n
“We have a globalised economy in which people have less trust in global institutions, making Bitcoin an appealing prospect.<\/p>\n
“I wouldn’t bet against Bitcoin hitting a million dollars in my lifetime, even in the next five to ten years.”<\/p>\n
This prediction echoed one made by former Goldman Sachs heavyweight Raoul Pal, who also said Bitcoin would reach this feat.<\/p>\n
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He told Stansberry Research in October: “Just from what I know from all of the institutions, all of the people I speak to, there is an enormous wall of money coming into this.<\/p>\n
“It’s an enormous wall of money — just the pipes aren’t there to allow people to do it yet, and that’s coming. But it’s on everybody’s radar screen, and there’s a lot of smart people working on it.”<\/p>\n
He continued: “The economy’s not going to recover for a lot longer than we expect.<\/p>\n
“There’s no stimulus around, and we’ve got more problems to come in Europe, the US, and elsewhere. And businesses don’t have enough cash flow.<\/p>\n
“They’re closing in droves. And that’s what I called the insolvency phase.”<\/p>\n
Raoul Pal has allocated more than 50 percent of his capital to Bitcoin.<\/p>\n
However, another expert told Express.co.uk that he is sceptical of the long term success Bitcoin can enjoy.<\/p>\n
DON’T MISS Giles Coghlan, chief currency analyst at HYCM, said: “When you see an asset and think, ‘Wow this can only go one way’ – that is a recipe for either making a fortune of losing a fortune.<\/p>\n “What I’d say is yes, you can invest in cryptocurrencies. I would advise all clients against using heavy leverage and manage their risks.<\/p>\n “Know exactly how much of your capital is at stake at any one time and have a clear exit plan.<\/p>\n “In my line of work you see people do disastrous things if you don’t understand how leverage works, which is the use of borrowed money to take on greater risk.”<\/p>\n Britain’s Financial Conduct Authority (FCA) warned investors of the risks that come with Bitcoin following the recent slump.<\/p>\n They said: “If consumers invest, they should be prepared to lose all their money.<\/p>\n “Some investments advertising high returns from crypto assets may not be subject to regulation beyond anti-money laundering.<\/p>\n “Significant price volatility, combined with the difficulties valuing [Bitcoin] reliably, place consumers at a high risk of losses.”<\/p>\n Express.co.uk does not give financial advice. The journalists who worked on this article do not own Bitcoin.<\/p>\n
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