Bitcoin hits $50,000 as Elon Musk's tweet sends Shiba Inu soaring
Cryptocurrencies were broadly higher on Tuesday afternoon as bitcoin crossed a key level of $50,000 (£36,702) for the first time in four weeks.
Bitcoin (BTC-USD) was up 5.4%, trading at $50,120. Ethereum (ETH-USD), the second biggest crypto by market cap, was up 3.3% to trade at at $3,445.
"The big factor for the bitcoin price now is if it can continue to move higher and that will only depend where the price will close today [Tuesday]," said Naeem Aslam, chief market analyst at AvaTrade.
He said "if we do see the price closing above $50,000, we are highly likely to see more upside moves."
"In addition to this, the outage in the tech space such as the Facebook network going down yesterday has once again assured investors that technology like bitcoin never goes down."
Meanwhile, meme token Shiba Inu (SHIB-USD) surged 51% to trade at $0.000013 after Tesla (TSLA) CEO Elon Musk, a crypto proponent, tweeted a photo of his puppy, which is the same breed the token is named after.
Floki Frunkpuppy pic.twitter.com/xAr8T0Jfdf
— Elon Musk (@elonmusk) October 4, 2021
The breed is also the same one behind dogecoin (DOGE-USD), which was up almost 10% on Tuesday.
Why is bitcoin back up?
Earlier, Aslam had said one of the reasons for bitcoin's recovery include US Federal Reserve chairman Jerome Powell's statement that stablecoins should not be banned.
This "helped rally the bulls and drag bitcoin prices up from the low $40,000s."
“Other possible explanations for the rally include a short squeeze and the end of the historically volatile month of September," he added.
Watch: BitGo CEO on Bitcoin: 'Large Peak, Large Retreat Ahead'
He also said crypto traders should consider how the proposed $1tn bipartisan infrastructure bill in the US will affect crypto markets, if passed.
The bill seeks to raise $28bn from the blockchain sector over the next 10 years to fund infrastructure development such as roads and bridges.
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“A provision in the bill could be used to require cryptocurrency brokers to report their activities to the Internal Revenue Service. The term 'broker' is, however, incredibly vague and does not clearly exclude other blockchain participants such as miners, wallet providers, and software developers," said Aslam.
Meanwhile one analyst has upped his bitcoin forecast and now believe sit could hit fresh all-time highs of $100,000 by the end of 2021.
Nigel Green, CEO and founder of financial advisory organisation deVere Group, said: “Last month, I noted in the media that we can expect the price of bitcoin to hit, or even surpass, its mid-April all-time high of $65,000 by the end of 2021."
“I now think that this is too conservative. I’m confident that if the current momentum in prices continues, we could see the Bitcoin price hit to-date unknown highs of $100,000."
Read more: European markets head higher following tech slide on Wall Street
On Powell's comments, he said: “It’s likely that other digital currencies will have greater regulatory oversight, which also is likely to positively shore-up the sector for the longer-term, but Bitcoin might be seen as a separate case by the authorities due, in part, to its digital gold-like status.”
He also sees sustained and growing interest from institutional investors including Wall Street giants and major payments companies as well as from mega influencers such as Musk, Twitter chief Jack Dorsey and Ark Invest CEO Cathie Wood, who believe “crypto is the inevitable future of money.”
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