Bitcoin price news: could BTC hit $50,000 after Tesla buys in?

Bitcoin price news has descended into a frenzy after Tesla announced it was buying $1.5bn worth of BTC. Could this crypto now end up cracking $50,000?

As February began, Bitcoin price news was dominated by fears of consolidation – with a sharp rejection taking place as BTC hit $40,000. Several experts had been warning that there wasn’t enough institutional interest to support BTC above $30,000… suggesting the world’s biggest cryptocurrency was heading for a rather unpleasant correction.

However, such Bitcoin price predictions were blown out of the water when it was announced that Tesla had bought $1.5bn worth of BTC – and that the electric vehicle manufacturer was planning to start accepting this digital asset as a payment method. The revelation was made in a filing to the US Securities and Exchange Commission, with BTC surging by $4,600 as investors digested this extremely bullish news.

Bitcoin price analysis shows that this cryptocurrency is now once again trading in record territory after breaking through $42,000 without breaking a sweat – hitting a peak of $48,000 in early trading on Tuesday, February 9. The frenzy made headlines around the world, and prompted confident Bitcoin price predictions that $50,000 is within sight. Others speculated about whether we’ll soon see other companies follow in Tesla’s footsteps by allocating some of their spare cash to this digital asset.

So… is Bitcoin a good buy right now? How are analysts reacting to the current Bitcoin price news? Let’s take the temperature of the market after Elon Musk’s big bet – with his company now having a greater exposure to BTC in dollar terms than MicroStrategy, one of the first publicly listed companies to aggressively back this cryptocurrency when the price was back in the $10,000s.

Bitcoin price prediction 2021: $50,000 within touching distance

Many of those making Bitcoin price analysis had confidently made predictions that BTC will manage to hit $50,000 at some point in 2021. Following on from Tesla’s blockbuster move, this milestone now appears to be even more likely – with some enthusiasts even suggesting this unprecedented price could be surpassed as early as this week.

One significant factor in this latest Bitcoin price news is how it could trigger a ripple effect throughout Wall Street and beyond – encouraging many corporations to look at BTC seriously to figure out what they’re missing. Tesla’s newfound exposure came days after MicroStrategy, which now owns more than 70,000 BTC, pitched the cryptocurrency to over 1,400 public companies.

There could be significant ramifications for Bitcoin price news if some of these firms do end up following suit. Unlike many other assets, BTC’s supply has a hard cap of 21 million that cannot be altered – and 18.6 million of them are already in circulation. To make matters worse, research has previously suggested that three to four million BTC have already been lost forever. All of this helps contribute to a supply squeeze, meaning that there isn’t enough Bitcoin to go around – and inevitably, such pressure pushes up the price. Only 900 BTC enters circulation every day, and key metrics suggest that investment funds catering to institutions are snapping up this cryptocurrency faster than it can be mined.

And away from the business community, financial advisers are receiving substantially more queries about Bitcoin from high net worth individuals who are following the cryptocurrency’s moves in the newspapers. Tom Wake-Walker, who works at the British investment consultant Redington, told Financial News:

“Clients are interested in what our take on it is within a more diversified portfolio.”

According to the FT, Tesla’s BTC strategy might not have many corporate copycats – with some specialists in treasury management expressing confusion over the rationale behind this strategy. Treasury Partners managing director Jerry Klein said:

“I don’t think there is a case to be made for investing corporate cash in a risky asset like Bitcoin, where they could experience significant declines.”

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Bitcoin’s price has surged by a staggering 300 per cent since October – tripling in the space of just four months. Of course, such substantial gains do increase the risk of a pullback, and as the old saying goes:

“What goes up must come down.”

When BTC broke $20,000 for the first time back in December 2017, it subsequently fell by a dizzying 80 per cent in the year that followed – slumping below $4,000 at one point. It’s always worth remembering that volatility can go both ways.

But generally speaking, many pro-crypto analysts recommend that it is worth gaining at least some exposure to Bitcoin – enough that you’d feel an advantage if BTC manages to surge into six-figure territory as some predict, but not enough that it’ll cause financial ruin in the event of a dreaded crash. Many advise investing 2 per cent of your net worth in crypto, rising to 5 per cent if you’re adventurous, and 10 per cent if you have a high appetite for risk.

Prior to the latest Bitcoin price news, analysts such as Bloomberg Intelligence’s Mike McGlone had argued that the risk of missing out on further gains far outweighed the danger of crypto enduring a massive crash. Pointing to how interest rates are at an unprecedented low – with debt-to-GDP levels and quantitative easing measures increasing – he said:

“The rising tide of global liquidity and accelerating digitalisation is uniquely supportive of the Bitcoin price.”

Of course, another common Bitcoin narrative concerns how the cryptocurrency is a better store of value than gold – and indeed, McGlone’s research indicates that money is rapidly flowing out of the precious metal markets and into cryptocurrency. It’s likely that, in the years to come, BTC could end up proving more popular among millennials than gold.

Back to the question of whether it’s worth buying BTC now. BTC gained 18.8 per cent in a single day on the back of the Tesla news – but ended up retracing to $45,500 as some traders decided to take profit. Although further surges can’t be ruled out, it might be worth attempting to buy into Bitcoin at a lower price level.

According to BlockTower’s chief investment officer Ari Paul, Bitcoin’s bull run is likely to continue for another nine months at least – but we could see some retracements of between 30 and 60 per cent along the way. His target for the high point of the current craze? BTC hitting anywhere between $100,000 and $400,000.

FURTHER READING: Tesla buys Bitcoin worth $1.5bn and plans to accept crypto payments
FURTHER READING: Bitcoin price analysis for February 8-14: coin could rise above $42,000 this week

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