Photographer: Akos Stiller / Bloomberg
Photographer: Akos Stiller / Bloomberg
Bitcoin is approaching a market value of $ 1 trillion, an increase that is helping cryptocurrency returns to far outperform more traditional assets such as stocks and gold.
The largest token added more than $ 415 billion in value in 2021 to about $ 956 billion, show data compiled by Bloomberg. The Bloomberg Galaxy Crypto Index, which includes Bitcoin and four other currencies, has more than doubled.
Speculators, corporate treasurers and institutional investors are believed to have fueled Bitcoin’s volatile rise. Cryptographers are clashing with skeptics about the dominant narrative around escalation: the former see an asset being adopted for its ability to protect risks like inflation, while the latter feel a precarious craze riding on waves of monetary and fiscal stimulus.
FOMO – fear of losing – may be at stake, said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney, adding that “in times of easy money, this increases and is partly what is driving interest current . “
Bitcoin was trading for around $ 51,300 as of 1:30 pm on Friday in Hong Kong, after quintupling last year. The performance of the cryptographic index outperforms stocks, gold, commodities and bonds in 2021.
This month, Tesla Inc. reported an investment of $ 1.5 billion and MicroStrategy Inc. boosted the sale of convertible bonds to $ 900 million to buy even more of the token. This brought the currency closer to corporate America.
Take the lead
The doubling of the cryptographic index this year puts stocks and commodities in the shade
Source: Bloomberg
“If the fundamentals of companies are closely linked to Bitcoin movements because they have suddenly become parallel speculators, we will be in bubble territory before you know it,” said Craig Erlam, senior market analyst at Oanda Europe Ltd.
Tesla CEO Elon Musk posted a somewhat cryptic tweet on Friday that seemed in part to defend the company’s action, saying that Bitcoin “is simply a less stupid form of liquidity than money”, adding that the decision by electric vehicle manufacturer is not “a direct reflection of my opinion.”
Read More: Musk defends Tesla’s Bitcoin movement and says the token is less dumb than money
The long Bitcoin trade is seen as one of the most competitive in the world, along with exposure to technology and overdrafts in dollars, according to the February edition of Bank of America’s survey of global fund managers.
AMP’s Oliver said that if Bitcoin “falls from grace – for example, due to government regulations or investors who are just shifting to the next new thing – then it can fall quickly”.
– With the help of Emily Barrett