DM Monitoring
London: Shares of companies that have invested in bitcoin have vastly outperformed on Wall Street in 2021 and are extending their gains thanks to Tesla’s $1.5 billion bet on the soaring digital currency.
The price of bitcoin hit a record high over $48,000 on Tuesday in a two-day surge after Tesla said on Monday that it had bought the digital currency and would soon accept it as a form of payment for cars.
A handful of bitcoin-related companies listed on U.S. stock exchanges were also buoyed by the disclosure that Tesla CEO Elon Musk, a fan of cryptocurrencies, added bitcoin to the electric car maker’s balance sheet.
Tesla’s bitcoin purchase amounts to a minor bet for the fast-growing electric car company with an $800 billion stock market value. However, it bolstered the digital currency’s emerging credentials as a mainstream financial asset.
Driven in part by interest from institutional investors, the price of bitcoin has quadrupled in the past four months, surging far beyond record highs set in 2017. Some investors view it a hedge against inflation.
Tesla gained after disclosing the investment on Monday, but dipped 1.6% on Tuesday, leaving its gain in 2021 at 20%, compared to the S&P 500’s 4% rise.
Companies with much more significant exposures to bitcoin in proportion to their overall stock market value than Tesla have also rallied following Tesla’s disclosure, increasing already strong stock gains driven by the cryptocurrency’s recent rally.
MicroStrategy, whose CEO Michael Saylor is an avid bitcoin bull, surged 22% on Tuesday, bringing its gain this week to over 50%, and it has surged over 200% so far in 2021. The business intelligence software company has bought about 71,079 bitcoins, now worth over $3 billion and equivalent to over a quarter of its $11.8 billion stock market value.
