Bitcoin was fast approaching the $50,000 mark today as the afterglow of Elon Musk-led Tesla's investment in the cryptocurrency had investors reckoning it may become a mainstream asset class for both corporations and money managers.
The most popular cryptocurrency has gained 1,150% from March 2020 lows as institutional investors search for alternative wealth stores and retail traders ride the wave.
It traded at a few hundred dollars only five years ago.
Bitcoin jumped 20% yesterday after Tesla announced it had a $1.5 billion investment and that it would eventually take the cryptocurrency as payment for its cars. That was its largest daily rise in more than three years.
The price of one bitcoin climbed to a peak of $48,216 - almost enough to buy one of the best-selling Tesla vehicles, Tesla Model Y SUV.
Rival cryptocurrency ethereum also struck a record high of $1,784.85 today.
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Musk, a well-known supporter of cryptocurrencies, foresees accepting the currency as a payment for Tesla cars and analysts reckon this is a larger shift as companies and big investment houses follow small traders into the asset.
"Bitcoin is definitely capturing investors' attention - I get more and more questions about it," said Marija Vertimane, senior strategist at State Street Global Markets.
"From a practical point of view, using bitcoin to buy anything - Tesla cars - would be still extremely difficult given its excessive volatility."
Bitcoin's volatility has been a hindrance for some serious investors.
Realised volatility, or daily price swings measured in terms of closing prices for Bitcoin over the past 90 days was at 72% compared with 16% for the S&P 500 stocks index and 6% for the euro currency.
Still, in Bank of America's January fund manager survey, bitcoin topped the list of "most crowded" trades. Another survey, by Deutsche Bank, warned of price bubbles in the cryptocurrency.
Billionaire Musk has long been a cryptocurrency fan - he has talked them up online - but Tesla's hard currency investment came as a surprise that has put a rocket under the sector.
Bitcoin is already up 67% this year, on top of a 300% rally last year, as investors search for alternatives to the dollar because of the US Federal Reserve's 0% interest rates. The dollar slid against most currencies today.
"We're in a position where these are the earliest phases of an allocation to bitcoin from the institutional and corporate community," said Michael Bucella, partner at crypto investment firm BlockTower on CNBC.
In the ongoing digital wave, central bankers and regulators, particularly in China, are also starting to embrace issuing their own digital currencies for everyday use, in a major break from the conventional workings of global finance.
Beijing will issue 10 million yuan ($1.55 million) worth of digital currency to residents that can be used during the Lunar New Year holiday starting on Thursday, domestic media reported.
However, Vitor Constancio, former vice-president of the European Central Bank, wrote on Twitter that policymakers should focus on regulating cryptocurrencies and only develop digital currencies if they will help banks in their role of enabling credit creation.
"Bitcoin prices should appear in 'commodities' lists, not in forex columns," he said.
The Tesla news-led rally stretched beyond bitcoin.
Shares of companies that provide trading platforms for bitcoin and the technology to "mine" the cryptocurrency surged in China, South Korea, and Australia, and big computer-chip making companies such as SK Hynix also rose.
Even dogecoin, a joke cryptocurrency with a dog as its symbol, has seen its value turbocharged after Musk mentioned it on Twitter.
It has jumped by 13% in the past day, according to CoinMarketCap.