NEW YORK / LONDON (Reuters) – Bitcoin hit a market cap of $ 1 trillion when it hit another record high on Friday, in contradiction to analyst warnings that it is an “economic side market” and poor protection against a fall in stock prices.
The most popular cryptocurrency in the world jumped to an all-time high of over $ 54,000, heading for a weekly jump of more than 11%. It is up about 64% so far this month and was last up 5.5% to $ 54,405.
BitcoinThe profit has been fueled by signs of acceptance by mainstream investors and companies, from Tesla and Mastercard to BNY Mellon.
All digital coins together have a market cap of approximately $ 1.7 trillion.
‘If you really believe that there is a store of value in it bitcoin, then there are many other benefits, ”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 $ 9 or $ 10 trillion. Even if bitcoin gets half the market capitalization of gold, which is still growth of 4x, or $ 200,000. So I don’t know when it will stop rising, ”he added.
Yet many analysts and investors remain skeptical of the patchy regulated and highly volatile digital assets that are little used for trading.
Analysts at JP Morgan said bitcoinCurrent prices were well above fair value estimates. General acceptance is increasing bitcoinIt’s correlation with cyclical assets, which rise and fall with economic changes, diminishing the benefits of diversification to crypto, the investment bank said in a memo.
“Crypto assets continue to rank as the worst hedge for large equity withdrawals, with questionable diversification benefits at prices so far above production costs, while correlations with cyclical assets increase as crypto property becomes mainstream,” said JP Morgan.
Bitcoin is an ‘economic side show’, it added, calling innovation in financial technology and the growth of digital platforms in credit and payments ‘the true financial transformational story of the COVID-19 era’.
Other investors said this week bitcoinThe country’s volatility hinders it becoming a widespread currency.
On Thursday, Tesla boss Elon Musk – whose tweets have been sparked bitcoin‘s rally – said owning the digital currency was only a little better than holding cash. He also defended Tesla’s recent $ 1.5 billion purchase of it bitcoin, which sparked mainstream interest in the digital currency.
Reuters Cryptocurrencies are soaring multiplied from the March lows.
Bitcoin proponents argue that the cryptocurrency is ‘digital gold’ that can hedge against the risk of inflation fueled by massive central bank and government stimulus packages designed to counter COVID-19.
Yet bitcoin According to JP Morgan, the long-term market capitalization should rise to $ 146,000 to equal the total private sector investment in gold through exchange-traded funds or bars and coins.
Rival cryptocurrency ether fell 0.3%, at $ 1,934.67, still close to a high of $ 1,951 reached earlier Friday. It was discontinued by growing institutional interest after its futures launched on the Chicago Mercantile Exchange.
(Reporting by Gertrude Chavez-Dreyfuss in New York and Tom Wilson in London; edited by Dan Grebler)
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