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Bitcoin rises above $40,000 thanks to Elon Musk and Paul Tudor Jones boost

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Tesla CEO Elon Musk has changed his stance on bitcoin. Photo: Maja Hitij/Getty Images
Tesla CEO Elon Musk has changed his stance on bitcoin. Photo: Maja Hitij/Getty Images

Bitcoin soared past the $40,000 (£28,328) mark again on Monday afternoon in London as American hedge fund magnate Paul Tudor Jones and Tesla (TSLA) boss Elon Musk threw their weight behind the cryptocurrency. 

Tudor Jones compared bitcoin to gold, in remarks, saying that it would be a good way to protect his wealth and diversify his portfolio. 

“I like bitcoin as a portfolio diversifier. Everybody asks me what should I do with my bitcoin? The only thing I know for certain, I want 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities. At this point in time, I don’t know what I want to do with the other 80% until I see what the Fed is going to do,” Jones told CNBC’s Squawk Box

Earlier, Musk had tweeted that the electric car company would resume accepting bitcoin (BTC-USD) once it becomes more environmentally friendly. 

Bitcoin, the most popular cryptocurrency was up more than 14% by the afternoon, following a rocky weekend. It was trading at about $40,970 by 3.30pm. 

Other cryptocurrencies were brought up in its wake, with the second largest cryptocurrency ethereum (ETH-USD) rising10.2% to trade at around $2,575.

Musk tweeted on Sunday evening: "When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions."

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The tweet was in response to industry publication Cointelegraph, which had quoted Sygnia CEO Magda Wierzycka as saying: “What we have seen with bitcoin is price manipulation by one very powerful and influential individual."

In February Tesla said it had invested $1.5bn (£1bn) in bitcoin and that it would begin accepting the cryptocurrency as a form of payment for cars. However, last month the company reversed that position and said it would no longer accept cryptocurrencies as payments for vehicles, citing environmental concerns.

Read more: Bitcoin shrugs off global regulation proposals

Bitcoin mining has previously been shown to use more energy than that of small nations due to the high levels of computer processing power needed. 

It has been a volatile month for bitcoin, which was hitting heights of around $51,000 at the same point in May. 

"In the short term, we are focused on the $40K price level," said Naeem Aslam, chief market analyst at Avatrade. "Traders are also watching the 200-day SMA on the daily time frame and if the price breaks above this moving average, that will be the first bullish signal for the bitcoin price."

Bitcoin's five-day journey. Chart: Yahoo Finance UK
Bitcoin's five-day journey. Chart: Yahoo Finance UK

Last week, the Basel Committee on Banking Supervision believes banks should set aside enough capital to cover losses on any bitcoin holdings in full and has issued a public consultation on proposals for the treatment of banks' cryptoasset exposures.

The plans would make it very expensive for banks to hold digital currencies, which could hinder a wider market acceptance of tokens. One proposal is to attach a 1,250% risk to a bank’s exposure to bitcoins and certain other cryptos.

Experts have said that the US "needs to form" a new crypto regulation commission to encompass both markets and institutions if it's "serious about regulating" bitcoin and other crypto assets.

Watch: What are the risks of investing in cryptocurrency?

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