Tesla Supercharges Bitcoin, Brent Rises Above US$60

Bitcoin hit a record-high near US$45,000 on Monday after Elon Musk's electric carmaker Tesla invested US$1.5 billion in the digital currency and said it would soon accept it as payment.

Meanwhile, the benchmark oil contract Brent North Sea rose above US$60 per barrel to hit the highest level since the coronavirus pandemic began to spread globally almost a year ago.

Shortly after news broke of Tesla's investment bitcoin hit US$44,795.20 before pulling back slightly.

The cryptocurrency is up by around 50 percent since the start of the year.

"This is probably one of the biggest developments for the cryptocurrency industry," noted Fawad Razaqzada, analyst at ThinkMarkets. "Tesla is going to be a major player in the auto industry and if it starts accepting bitcoin as a form of payment, it will give the digital currency further legitimacy."

Tesla's announcement, in a US Securities and Exchange Commission document, is a sign of confidence in the cryptocurrency that regulators are concerned could be used for illegal transactions.

"As more and more companies start accepting bitcoin, this will only lead to further increases in demand in a market which is limited in supply," Razaqzada added.

Tesla's move comes after CEO Musk last week changed his Twitter bio to read simply "#bitcoin".

Just 12 years old, bitcoin has been on a meteoric rise since March, when it stood at US$5,000, spurred by online payments giant PayPal saying it would allow account holders to use cryptocurrency.

The climb in Brent above US$60 has come owing to the Opec oil cartel and its allies cutting output after the coronavirus pandemic slashed demand, according to analysts.

"It is worth reminding oneself that Opec+ is the single most important reason for why the oil price reached US$60" on Monday, noted Bjarne Schieldrop, chief commodities analyst at SEB Research.

"It is because of large cuts by Opec+... since May," he added.

Brent crude hit US$60.40 per barrel on Monday, the first time it has exceeded US$60 since February 2020.

European and Asian stock markets climbed on Monday, and Wall Street was higher in midday trading.

"Stock markets are showing modest gains this afternoon as dealers are hopeful the Biden administration will sign off on the US$1.9 trillion relief package as a way of stimulating the US economy," said market analyst David Madden at CMC Markets UK.

Adding to the upbeat mood is data showing new Covid infection rates, with last week seeing the lowest level since October, while governments begin to get to grips with inoculation programmes. (AFP)