Tesla Inc. said on Monday it had invested around $1.5 billion in bitcoin and expected to begin accepting payment for its cars and other products with it in the near future, prompting a more than 10 percent jump in the electronic currency.

Analysts said the move by one of the world's best-known companies was liable to prove a game changer for bitcoin.

The world's largest cryptocurrency was up 14 percent in late trade, setting a new record high above $44,000. The Grayscale Bitcoin Trust rose 20.6 percent, its highest since mid-January. Gold jumped more than 1 percent while ethereum, another cryptocurrency, surged to a record high.

Comments

Devin Ryan, equity research Analyst at JMP Securities, New York (email)

"Today's announcement that Tesla ... has purchased $1.5 billion of bitcoin for its balance sheet in advance of allowing customer payments in bitcoin is bullish for several reasons. It ties the crypto asset class to a nearly trillion dollar and highly visible company that we are confident put substantial resources into vetting the decision and structure (and after its analysis, was confident moving forward). 

"We also believe this will spark other companies (private and public) to explore Tesla's decision and determine whether they should look to do something similar. Simply put, Tesla's decision de-risks the decision for other companies, which could reasonably open the door for more corporate adoption. 

"MicroStrategy, which has been a pioneer in purchasing bitcoin for its firm treasury account as a public company, held a virtual event last week which discussed their decision and process for entering the bitcoin space and gave a blueprint for other companies to think about making similar decisions."

Jim Smigiel, non-traditional strategies, SEI Investments (email)

"Ironically, wider acceptance of these technologies may require more centralization and third-party verification, which would cause them to become more similar to the systems they were designed to replace.

"The cryptocurrency market is just beginning to mature and the supportive value of digital coins remains difficult to price.

"We view them as highly speculative instruments, which makes them an unsuitable investment choice for pursuing important financial life goals – particularly for investors who can't afford the high risk of permanently losing money."

Thomas Hayes, managing member, Great Hill Capital LLC

"It's saying that Elon Musk believes that buying Bitcoin will grow faster and generate a better return for his shareholders than buying Tesla stock. In my view it's not a tremendous vote of confidence in Tesla stock.”

"Now, he may see what MicroStrategy did and the market started to play the MicroStrategy stock as a proxy for Bitcoin and it attracted flows so there might be a clever play like that."

"It's a huge vote of confidence for Bitcoin there's no question about that because now other companies will start to look at if Tesla is doing it, should we allocate some of our cash into bitcoin?

"If any lesser mortals had made the decision to put part of their balance sheet in Bitcoin I don't think it would have been taken seriously."

"But when the richest man in the world does it everyone has to take a second look there's no question about it.”

Robert Pavlik, senior portfolio manager, Dakota Wealth Management

"This just highlights its (Tesla) ability to show that it is just that much more technologically sophisticated than other companies, that it is willing to accept this relatively new form of payment in exchange for a luxury automobile.”

"It sort of elevates (Tesla's) stature in the minds of people who are drawn to its products. If you are drawn to electric vehicles and drawn to Elon Musk then taking in Bitcoin is just perceived to be as just so much ahead of the curve.”

"Musk getting involved in Bitcoin, to those investing in Bitcoin will be used as a way to tell others that this is a real asset, you can actually do something with it, they will support it as an argument of being the way of the future."

"It is just another reason to point to the asset and say 'even the richest guy in the world accepts this form of payment.'"

(Cover via CFP)