Bitcoin hit a market capitalization of US$1 trillion as it rose to yet another record high on Friday, countering analyst warnings that it is an “economic side show” and a poor hedge against a fall in stock prices.
The world’s most popular cryptocurrency jumped to an all-time high of US$56,399.99, posting a weekly gain of 14 per cent. It has surged nearly 70 per cent so far this month and was last up 8 per cent at US$55,664.
Bitcoin’s gains have been fueled by signs it is gaining acceptance among mainstream investors and companies, from Tesla Inc and Mastercard Inc to BNY Mellon .
All digital coins combined have a market cap of around US$1.7 trillion.
“If you really believe there’s a store of value in bitcoin, then there’s still a lot of upside,” said John Wu, president of AVA Labs, an open-source platform for creating financial applications using blockchain technology.
“If you look at gold, it has a market cap of US$9 or US$10 trillion. Even if bitcoin gets to half of gold’s market cap, that’s still growth of 4X, or US$200,000. So I don’t know when it stops rising,” he added.
The next milestone will be overtaking Alphabet Inc , currently valued at US$1.431 trillion, said Jacob Skaaning, portfolio manager at crypto hedge fund ARK36.
“There will likely be some big fluctuations along the way, but I’m still very bullish and I believe the uptrend will continue for the time being,” he added.
Still, many analysts and investors remain skeptical of the patchily regulated, highly volatile digital asset, which is little used for commerce.
Analysts at JP Morgan said bitcoin’s current prices were well above estimates of fair value. Mainstream adoption increases bitcoin’s correlation with cyclical assets, which rise and fall with economic changes, in turn reducing benefits of diversifying into crypto, the investment bank said in a memo.
Source: Global News