NEW YORK / LONDON (Reuters) – Bitcoin reached a market capitalization of $ 1 trillion by breaking another record high on Friday, contrary to analysts’ warnings that it is an “economic show” and a bad hedge against a fall in stock prices.
The world’s most popular cryptocurrency has jumped to an all-time high above $ 54,000, setting a course for a weekly jump of more than 11%. It has risen about 64% so far this month and the latest high was 5.5% to $ 54,405.
BitcoinThe company’s earnings were fueled by signs that it is gaining acceptance among major investors and companies, from Tesla and Mastercard to BNY Mellon.
All combined digital currencies have a market capitalization of around $ 1.7 trillion.
“If you really believe that there is a store of value in bitcoin, so there are still many advantages, ”said John Wu, president of AVA Labs, an open source platform for building financial applications using blockchain technology.
“If you look at gold, it has a market capitalization of $ 9 or $ 10 trillion. Even if bitcoin it reaches half the market value of gold, which still grows 4X, or $ 200,000. So I don’t know when to stop increasing, ”he added.
Still, many analysts and investors remain skeptical of the poorly regulated and highly volatile digital asset, which is little used in commerce.
JP Morgan analysts said bitcointhe company’s current prices were well above estimates of fair value. Increase in conventional adoption bitcoinThe company’s correlation with cyclical assets, which increase and decrease with economic changes, in turn, reducing the benefits of diversification in cryptography, the investment bank said in a memo.
“Crypto assets continue to be classified as the poorest hedge for large stock losses, with questionable diversification benefits at prices well above production costs, while correlations with cyclical assets are increasing as cryptographic ownership is incorporated ”Said JP Morgan.
Bitcoin it is an “economic side show”, he added, calling innovation in financial technology and the growth of digital platforms in credit and payments “the true story of financial transformation of the COVID-19 era”.
Other investors said this week bitcoinThe company’s volatility represents an obstacle to becoming a widespread means of payment.
On Thursday, Tesla chief Elon Musk – whose tweets fueled bitcoinThe recovery from – said that owning digital currency was only slightly better than holding money. He also defended Tesla’s recent $ 1.5 billion purchase bitcoin, which sparked the dominant interest in digital currency.
Reuters Cryptocurrencies have increased several times since the March lows.
Bitcoin proponents argue that cryptocurrency is a “digital gold” that can protect itself against the risk of inflation triggered by huge central bank and government stimulus packages designed to contain COVID-19.
Yet bitcoin it would need to increase to $ 146,000 in the long run for its market capitalization to equal total private sector investment in gold through exchange-traded funds or bars and coins, according to JP Morgan.
The rival ether cryptocurrency fell 0.3% to $ 1,934.67, still close to a record $ 1,951 set early on Friday. It was raised by growing institutional interest, after its futures were launched on the Chicago Mercantile Exchange.
(Reporting by Gertrude Chavez-Dreyfuss in New York and Tom Wilson in London; Editing by Dan Grebler)
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