Bitcoin surges past $44,000 after Tesla invests about $1.5 billion

Tesla's foray into Bitcoin was elaborated in a filing, where it indicated that it is a part of the company's broad investment policy. The electric car maker is diversifying its monetary reserves to maximize returns on cash.

The move comes after Musk had already publicly stated the possibility of converting "large transactions" of Tesla's assets into Bitcoin back in December.

Tesla's embrace of the cryptocurrency isn't restricted as a mere financial investment. The car manufacturer will also begin to accept Bitcoins as payment for its cars and services in the near future.

This would make Tesla the first major car seller doing business using the blockchain-driven digital currency. This legitimizes Bitcoin as a viable currency, while also increasing its value in the short term.

The recent Bitcoin rally might be linked to two disparate, but potentially interlinked events.

The Federal Reserve (which isn't a US Government body despite its name) printed a fifth of all US dollars that ever existed last year. That's 3.44 trillion in US dollars pumped into the economy.

While US citizens got stimulus checks, the world's billionaires became richer to a cool $10.5 trillion.

Printing money by the truckloads tends to cause inflation in the long term, which reduces the dollar's actual purchasing power.

Under such circumstances, the smart money is usually diverted from the freshly abundant cash and into investments that hold their value better. And sure enough, property rates have kept climbing despite the pandemic.

The recent Bitcoin rally is also attributed to the same phenomenon.