Another day, another record high. There’s only really one story to cover today, and that’s bitcoin. Again. As I write it stands at $47,000. Yesterday saw its greatest up day ever. Why? Elon Musk –that’s why. The most popular cryptocurrency BTC=BTSP has gained 1,150% since its March 2020 lows, as institutional investors searched for alternative investments and retail traders rode the wave. It traded at a few hundred dollars only five years earlier. Glassnode, which provides insight on blockchain data, said in its latest report that bitcoin’s limited supply suggested further gains for the virtual asset.
Bitcoin’s liquid supply is continuing to decrease, as investors increasingly acquire and “hodl” the asset for the long term. “Hodl” is crypto slang for the act of an investor holding the asset instead of selling it. Currently, around 78% of issued bitcoin are either lost or being “hodled.” This leaves less than four million bitcoins to be shared among future market entrants – including large institutional investors such as PayPal, Square, S&P 500 companies, and exchange traded funds, Glassnode said.
Yesterday, Nasdaq-listed car manufacturer, Tesla (TSLA) announced that it has bought some $1.5bn-worth of bitcoin. The price (of bitcoin, not Tesla) duly shot up. It’s hardly a surprise. Last month, Tesla announced that it might hold some of its cash reserves in “certain alternative reserve assets including digital assets, gold bullion [and] gold exchange-traded funds.”
Then the world’s richest man added the bitcoin hashtag to his bio on Twitter. He began making cryptic comments. “In retrospect it was inevitable”, he said. He started posting memes about dogecoin, a cryptocurrency that was invented as a joke (yes, really), going to the moon. Then last week Musk said, during a conversation on Clubhouse, that he thought bitcoin “was on the verge of broad acceptance”.