Bitcoin Boom Powers $ 1 Trillion Cryptocurrency Market Cap
Bitcoin hit a $ 1 trillion market cap for the first time after a month when the cryptocurrency skyrocketed in value by over 60%. The world’s most popular cryptocurrency is now worth nearly $ 54,000 at the time of writing, a new all-time high.
Bitcoin’s profit is driven by signs that it is gaining acceptance from major investors and companies, from Tesla and Mastercard to BNY Mellon. Ava Trade’s chief market analyst Naim Aslam said bitcoin, which hit $ 1 trillion, was the most exciting news of the year.
It was a long time ago, and the fact is that we are only 10 times far from turning the market capitalization of gold upside down. This is definitely big news for the industry, and it wouldn’t be possible without bringing in smart money.
Payment integration and store of value are factors driving up prices, and as long as that support remains, we are likely to have even broader headlines. Many analysts and investors remain skeptical about the highly regulated and highly volatile digital assets that are still underutilized for trading.
JP Morgan analysts said current bitcoin prices are much higher than fair value estimates. Widespread adoption increases the correlation of bitcoin with cyclical assets that rise and fall with economic changes, which in turn diminishes the benefits of diversification into cryptocurrency, the investment bank said in a statement.
Crypto assets are still considered the worst defense against large drawdowns in stocks with questionable diversification benefits at prices well above production costs, while the correlation with cyclical assets rises as crypto ownership becomes the mainstream, said JP Morgan.
Bitcoin is the economic side of things, he added, calling innovation in financial technology and the rise of digital platforms in credit and payments the real story of the financial transformation of the COVID-19 era. Other investors this week said bitcoin’s volatility poses a hindrance to its ambition to become a widespread means of payment.
Bitcoin proponents argue that cryptocurrency is digital gold that can hedge against inflation risk from massive central bank and government stimulus packages designed to tackle COVID-19.