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Bitcoin price surges after Elon Musk shows support

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·3-min read
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Musk’s bio change on Twitter boosted bitcoin price on Friday. Photo: Getty
Musk’s bio change on Twitter boosted bitcoin price on Friday. Photo: Getty

Tesla (TSLA) founder Elon Musk has sent the price of bitcoin (BTC-USD) soaring after the billionaire tagged the cryptocurrency in his Twitter (TWTR) bio on Friday.

Musk’s move saw the price of bitcoin, which dipped below $30,000 (£21,880) earlier this week, soar nearly 19% to over $37,000 per bitcoin. The CEO tweeted: “In retrospect, it was inevitable” following the surge.

The cryptocurrency community and Bitcoin’s chief technology officer, cheered Musk’s bio change which boosted the price.

"We’re going back to our roots: encryption, privacy, peer-to-peer, the rights of the individual, free expression, and decentralisation of power,” Balaji Srinivasan said on Twitter.

The Tesla boss’ comment comes after online brokerage platforms Robinhood Markets and Interactive Brokers sparked an outrage on Thursday after the platforms restricted its users from trading GameStop (GME) and other stocks.

Robinhood, which said it’s looking to lift the ban on Friday, followed other platforms after Reddit-inspired investors bought up shares in a war on hedge funds, that have long been shorting the stocks.

The world’s richest man also waded into the GameStop drama which has rocked global markets, saying “shorting is a scam.”

Prices in the cryptocurrency leapt 16% on Friday, at around 12pm in London.

Chart: Yahoo Finance
Chart: Yahoo Finance

Analysts predict that the digital currency — which has soared to all-time highs of around $42,000 in January — to go into “another rapid ascent.”

"Bitcoin may be going into another rapid ascent. An increasing recognition of bitcoin’s distinctive traits should outlast the current GameStop interest. While nascent, cryptocurrencies have the potential to invert the power structure of inequitable financial markets that are weighted against retail investors," Paolo Ardoino, chief technology officer at Bitfinex, said.

He added: “A little ignored fact is that technology underpinned the financial crisis of 2008. It was technology that linked the sub-prime debt to the esoteric derivatives products that so spectacularly blew up. In a similar vein, it is the democratisation of technology that has accelerated the GameStop short squeeze.”

WATCH: What is bitcoin?

Ardoino said that he was “confident that these types of social channels have the potential to cause further disruption to the status quo and challenge the financial elite.”

The combined value of all bitcoin tokens in circulation reached half a trillion dollars for the first time ever last month, putting it ahead of Visa (V) and making it the world’s largest financial service.

Bitcoin started 2020 at around $7,000 per coin. Despite its rise in the last year, the cryptocurrency remains extremely volatile and experts continue to remain sceptical about using it as an investment.

According to industry data, around 13% of all bitcoin in the world, some $80bn out of $600bn, belongs to just over 100 individual accounts, the Telegraph reported. The top 40% of all bitcoin, roughly $240bn, is held by just under 2,500 known accounts out of roughly 100m overall.

READ MORE: Bitcoin suffers worst week in months amid regulation fears

But there have been some concerns over the digital currency as fears of regulation mount.

Earlier this month, the Financial Conduct Authority (FCA) warned consumers that they should be prepared to lose all their money if they invest in products promising higher returns from virtual currencies such as bitcoin. The comment kick-started bitcoin’s recent fall from grace.

“The FCA is aware that some firms are offering investments in cryptoassets, or lending or investments linked to cryptoassets, that promise high returns,” the City watchdog said.

“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of products, they should be prepared to lose all their money.”

Last week, US Treasury secretary Janet Yellen also expressed scepticism over bitcoin, and concern has emerged over a "double spend" phenomenon that would display a flaw in the cryptocurrency's software.

WATCH: How Options-Trading Redditors Fed the GameStop Frenzy

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