Bitcoin reached a $1 trillion market capitalization when it climbed to another record high on Friday, ignoring investor warnings that it is an “economic sideshow” and a weak hedge against declining stock prices. The most successful cryptocurrency throughout the world soared with an all high of $56,399.99, recording a 14 percent weekly gain. That’s almost 70% so far in this month, and it’s last increased by 8 percent to $55,664.
Bitcoin’s gains were fuelled by indications that it is gaining recognition from Tesla Inc and Mastercard Inc to BNY Mellon among mainstream investors and businesses.
The market value of all digital coins combined is about $1.7 trillion.
“If you really feel there’s a store of wealth in bitcoin, then there is quite a lot of upside,” said John Wu, president of AVA Laboratories, an open-source platform for developing financial apps using blockchain technology.
The next benchmark will be to surpass Alphabet Inc, which is currently priced at $1,431 trillion, said Jacob Skaaning, ARK36 crypto hedge fund portfolio manager.”There could likely be other big swings along the journey, but I’m really very optimistic and I expect the uptrend will proceed for the time being,” he said.
Nonetheless, many observers and investors are wary of the patchily controlled, pretty unstable digital capital, which is little used for trading.
JP Morgan analysts said bitcoin’s existing values were way above market value figures. Mainstream acceptance raises the association of bitcoin with cyclical properties, which rise and fall with economic developments, in turn diminishing the advantages of crypto diversification, the investment bank said in a memo.
“Crypto asset continues to rank as the weakest hedge for significant pullbacks in equity markets, with a dubious diversified portfolio at rates far above manufacturing costs, while similarities with cyclical assets are increasing as crypto ownership is fully accepted,” JP Morgan said.
On Thursday, Elon Musk-whose tweets sparked the Bitcoin rally-said that owning a digital coin was just a little better than holding currency. He also defended Tesla’s latest acquisition of $1.5 billion in bitcoin that fueled mainstream interest in the digital currency.