Bitcoin hit a fresh record above US$48,000 (HK$374,400) yesterday, a day after Tesla billionaire Elon Musk announced he had invested US$1.5 billion in the world's largest cryptocurrency.

The digital asset rose as much as 22.26 percent to US$48,226.25 before paring some of the gains while posting 56.25 percent year-to-date growth as of yesterday, according to data from Coindesk.com.

It was trading at about US$46,605 as of 8pm in Hong Kong.

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.

Bitcoin has gained 1,150 percent 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 back.

On Monday, it leapt 20 percent after Tesla announced its 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.

Rival cryptocurrency ethereum, meanwhile, struck a record high of US$1,784.85 yesterday.

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 percent compared with 16 percent for the S&P 500 stocks index and 6 percent for the euro currency.

Still, in BofA'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.

Bitcoin is on top of a 300 percent rally last year, as investors search for alternatives to the US dollar because of the US Federal Reserve's zero percent interest rates.

The greenback slid against most currencies yesterday, said.

"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.

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.

Shares of companies that provide trading platforms for bitcoin and the technology to ‘mine’ the cryptocurrency surged. REUTERS

Bitcoin hits US$48,000 after Tesla embrace