Bitcoin soared through the key $50,000 level on Tuesday for the first time as the growing acceptance of the world’s biggest cryptocurrency among large banks and investment funds continued to draw in mainstream investors.
After a meteoric rise in which its value increase by 75% since the start of the year, bitcoin hit $50,547.70 in European trading at around 12.35pm GMT.
The price surge means Elon Musk’s electric car company Tesla has piled up a virtual profit of £420m in the week since the entrepreneur said the car company had bought bitcoins then worth $1.5bn. At the time of the announcement, on 8 February, they were trading at $39,406.
Only last March, bitcoin was trading at below $6,000 and in 2016 a single coin was worth less than $400.
Analysts said the increase was a combination of endorsements from prominent business people, including Musk, and several investment banks that have said they would buy the currency.
PayPal users in the US can buy and sell a selection of cryptocurrencies, while Jack Dorsey, Twitter’s co-founder and chief executive, recently said he and the rapper Jay-Z would buy 500 bitcoin – now worth £25m – to start an endowment fund for Africa and India.
Morgan Stanley has said that its $150bn investment fund is looking closely at a large purchase of bitcoins, while it is understood that Goldman Sachs and JP Morgan, which have been wary of cryptocurrencies, are soon to announce investments.
As the price of bitcoin rocketed in late 2017, JP Morgan’s chief executive, Jamie Dimon, called the currency a fraud that would not end well, saying he would “fire in a second” any JP Morgan staff member trading bitcoin, because it was against the bank’s rules and was “stupid”. More recently, however, Dimon’s views have changed, with him conceding at the end of last year that a number of “very smart people” were buying the cryptocurrency, although he said it was “not my cup of tea”.
There are still many sceptics. Last month the Bank of America Securities’ chief investment strategist, Michael Hartnett, said the recent surge in price may be “the mother of all bubbles”.