Bitcoin Tops $50K for First Time, as Institutions Move to Accept Cryptocurrency

Bitcoin climbed above $50,000 for the first time Tuesday as major companies continue to show increased interest in the cryptocurrency. Through Friday, Bitcoin has gained about 65% since January 1 and is up about 360% in the last 52 weeks.

The latest rally appears to have been sparked by MicroStrategy's announcement that it plans to increase its investment in Bitcoin, underscoring corporate acceptance of digital currency not backed by a government.

The rally won't price individual investors out of the market and is likely to increase fractional holdings in Bitcoin, an analyst believes.

Bitcoin
Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 13, 2018. P REUTERS/Dado Ruvic/Illustration

"Just like we have dollars and cents, Bitcoin can be subdivided into 'Satoshis,' named after its pseudonymous creator, Satoshi Nakamoto," Jason Deane, Bitcoin analyst at Quantum Economics in London, told Newsweek.

"A Satoshi is one hundred millionth of a Bitcoin, expressed thus: 0.00000001[or, 1e-8]," Deane said. "Our view is that in the future, most of us will be dealing with these units rather than entire Bitcoin, as the latter will simply be too valuable for most individuals to hold. Right now, a single U.S. dollar can buy 2,106 Satoshi, or "Sats," as they are affectionately referred to."

He said increased blockchain activity suggests strong retail activity and higher signup rates reported by most major exchanges, further indications of growing interest in Bitcoin among individual investors. Nevertheless, institutional investors are likely to continue to deal in whole Bitcoins.

Typically, strong demand drives prices higher, but Deane said Bitcoin may face price volatility ahead.

Robinhood, Stock Market, Trade
The Robinhood investment app is seen on a smartphone screen in this photo illustration on June 24, 2020 in Washington, D.C. JIM WATSON/AFP via Getty Images

"It's worth noting that $50,000 really is a very important psychological barrier—probably the most important yet—and comes with a significant sell wall requiring a strong breakthrough," Deane said. "However, we expect a lot of volatility around this level before it becomes any sort of long-term support."

In mid-day trading, Bitcoin fetched $48,340,18, down from $50,584.85, or about 4.44%, according to CoinDesk.

MicroStrategy, an enterprise software company based in Tysons Corner, Virginia, on Tuesday said it plans to offer $600 million in convertible debt to increase its investment in Bitcoin. In a filing with the Securities and Exchange Commission on February 2, the company said it held about 72,000 Bitcoins worth about $3.6 billion at Tuesday's price.

In December, the company completed a $650 million offering to finance its purchase of additional Bitcoins. Convertible notes are sold as debt, but can be turned into stock, cash or a mix of both in the future.

MicroStrategy CEO Mike Saylor is an early investor in Bitcoin. The company purchased 21,454 Bitcoins with cash on hand in August. Saylor encouraged others to invest in Bitcoin, including Tesla's CEO Elon Musk, who later purchased about $1.5 billion of the cryptocurrency and tweeted about his decision, boosting the price.

MicroStrategy's shares have soared about 660% since August 11 when the company announced its initial purchase of Bitcoin. In mid-day trading Tuesday, MicroStrategy changed hands at $978.13 a share, down $56.18, or 5.43%. The 52-week high is $1,315.

Elon Musk
Tesla and SpaceX CEO Elon Musk leaves the Westhafen Event & Convention Center after attending the CDU/CSU faction meeting on September 2, 2020 in Berlin, Germany. Germany. Filip Singer-Pool/Getty