Bitcoin has hit $1 trillion market cap, another record high
The market capitalization reached $1 trillion as it reached a record high on Friday, with analysts warning that it was an “economic side show” and a weak hedge against a share price decline.
The world’s most popular cryptocurrency has set an all-time high of over $54,000, setting it to jump more than 11% weekly. So far this month it has risen an average of 64% and lastly rose 5.5% to $ 54,405.
From Tesla and MasterCard to BNY Mellon, Bitcoin’s gains have ignited signs of acceptance among mainstream investors and companies.
The combined market cap of all digital coins combined is around $1.7 trillion.
“If you really believe that Bitcoin has a store of value, there are still a lot of contradictions,” said John Woo, president of AVA Labs, an open-source platform for creating financial applications using blockchain technology.
“If you look at gold, its market cap is $9 or $10 trillion. Even though Bitcoin has halved the gold market cap, it still rises 4x or ,$200,000. So I don’t know when it stops growing, ”he added.
Nevertheless, many analysts and investors are skeptical about Pachili-controlled and highly volatile digital assets, which are rarely used for trading.
Analysts at JPMorgan say current bitcoin prices are better than fair price estimates. The adoption of the mainstream increases the interrelationship of bitcoin with cyclical assets, which rise and fall with economic changes, consequently reducing the benefits of diversification in crypto, the investment bank said in a memo.
“Crypto assets continue to rank as the poorest hedge for a major downturn in equities, with diversified advantages in price over production costs so far, while the correlation with cyclical assets as the mainstay of crypto ownership is growing,” said JP Morgan.
Bitcoin is an “economic show”, he added, calling for “innovation in financial technology and the growth of digital platforms and the real financial transformation of the Covid-19 era in terms of credit and lending.”
Other investors said this week that Bitcoin’s volatility poses a barrier to becoming a broader way to pay for it.
On Thursday, Tesla boss Elon Musk – whose tweets sparked the Bitcoin rally – said ownership of digital coins is a bit better than keeping cash. He also defended Tesla’s recent $1.5 billion bitcoin purchase, which caters to mainstream interest in digital currency.
Bitcoin proponents argue that cryptocurrency is the “digital gold” that can fight the risk of inflation spread by the huge central bank and government stimulus packages designed to deal with Covid-19.
However, JPMorgan said Bitcoin would need to raise the exchange rate to ১৪ 14,000 for a long-term market cap, equaling the total private sector investment in gold through exchange-traded funds or bars and coins, according to JPMorgan.
Rival cryptocurrency Ether traded down 0.3% at $1,994,34.67, still near the record of $1,951 reached on Friday. It has been moved by growing institutional interest since the futures were launched on the Chicago Mercantile Exchange.
