Bitcoin Hits $1 Trillion In Market Value As Cryptocurrency Surge Continues: Elon Musk holding Bitcoin virtual currency/ Bloomberg The crypto...
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| Bitcoin Hits $1 Trillion In Market Value As Cryptocurrency Surge Continues: Elon Musk holding Bitcoin virtual currency/ Bloomberg |
The digital currency was trading at just under $54,000 per coin Friday as it hit the new level, and rose above $55,000 later in the session, according to Coin Metrics. The price of bitcoin has now gained about 350% over the past six months.
"Bitcoin's market cap hitting $1 trillion demonstrates the mainstreaming of cryptocurrency as a store of value," said Adam Liposky, Ecosystem Operations Lead at Pocket Network, a blockchain data ecosystem for Web3 applications.
"Most of us in the market view this milestone as validation for the entire market." The cryptocurrency now joins a rarified trillion-dollar market capitalization club with the likes of Amazon, Microsoft, Apple, and Alphabet. "From white paper to $1 Trillion. #Bitcoin is eating gold alive," tweeted Gemini's Cameron Winklevoss. Pundits have long criticized the cryptocurrency's price volatility and rapid ascent. Many fear it's a bubble waiting to burst.
Analysts at JPMorgan said have pointed to the fluctuating price of bitcoin as a problem. They said bitcoin was far more volatile than gold, which has often been pitted against the cryptocurrency. "In our opinion, unless bitcoin volatility subsides quickly from here, its current price … looks unsustainable," the analysts said. Yet, bitcoin in recent weeks has gained the acceptance of major institutions, including BlackRock, BNY Mellon, and Mastercard.
Elon Musk's Tesla earlier this month revealed that it bought $1.5 billion of the cryptocurrency in January. "There are a number of reasons why Bitcoin is soaring," Nicholas Pelecanos, head of trading at blockchain company NEM. "But what stands out most is the trend that Microstrategy started and Tesla popularized: moving institutional balance sheets into Bitcoin to hedge against inflation." Underlying Bitcoin's rally is the stimulus packages that governments and central banks have distributed to help with a global recovery, which, analysts said, have lifted nearly all markets.
Bitcoin'skyroketing has been fueled in part by the increased adoption of bitcoin by major investors and companies. The oldest bank in the United States, the Bank of New York Mellon, announced earlier this month that it was moving into space. Elon Musk's Tesla converted some of its balance sheet cash into bitcoin earlier this year and said it would start accepting the digital tokens as payment.
Bitcoin "has started to get so big that it arguably creates its own demand as companies and institutions begin to make forays into a field they wouldn't have touched a few months previously," Deutsche Bank research strategist Jim Reid said in a note. "Ironically it is turning itself into a credible asset class to many by rallying so much of late and also by getting increasing institutional buy-in."