Bitcoin Rises Despite Dollar Strength as Elon Musk Adds BTC Payment Option

Tesla accepting bitcoin payments and running its own nodes is "massively bullish," according to one analyst.

AccessTimeIconMar 24, 2021 at 9:31 a.m. UTC
Updated Mar 6, 2023 at 3:10 p.m. UTC
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Bitcoin (BTC) jumped early Wednesday after the Tesla CEO Elon Musk said the electric vehicle maker is now accepting the cryptocurrency as a payment option. Musk's Twitter announcement overshadowed the dollar's strength, helping the cryptocurrency stay bid.

"You can now buy a Tesla with [b]itcoin," Musk tweeted at 7:02 UTC (3:02 a.m. ET), adding the cryptocurrency received in payments won't be converted to cash, meaning the company is adding to its already sizable stash of bitcoin.

Bitcoin rose from $54,700 to above $56,000 following Musk's announcement, having defended support at $53,000 on Tuesday. Tesla announced in early February it had bought $1.5 billion worth of bitcoin, validating the cryptocurrency's appeal as a reserve asset.

While the electric vehicle maker's acceptance of crypto as payment will undoubtedly grab the headlines, it's something Musk had said he likely would do when he announced Tesla's bitcoin investment earlier this year. What's at least as significant is his statement that Tesla operates its own bitcoin nodes as it shows the company - and its CEO - are committing even further to the cryptocurrency.

"Tesla accepting bitcoin payments and running its own Bitcoin nodes is massively bullish. Others will follow," trader and analyst Alex Kruger tweeted.

Musk's announcement comes two days after Federal Reserve's Chairman Jerome Powell called bitcoin a volatile speculative asset.

At press time, bitcoin is changing hands near $55,300, representing a 3.6% gain on the day. The cryptocurrency is trading higher despite the strength of the U.S. dollar in the foreign exchange markets. The dollar index (DXY), which tracks the greenback's value against majors, has risen to 92.52 – the highest level since Nov. 24.

The two assets have mainly moved in opposite directions since March 2020. However, the inverse correlation has weakened somewhat in recent days, with bitcoin trading steady above $50,000 amid the DXY's rise to four-month highs.

The cryptocurrency is now fast approaching a descending trendline hurdle, as seen on the chart below.

A breakout above the trendline hurdle would open the doors for a re-test of record highs above $61,000. On the downside, $53,000 is key support.

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