Bitcoin hits a $ 1 trillion market cap, heading up to a new-term peak

NEW YORK / LONDON – Bitcoin hit $ 1 trillion market capitalization as it rose to another high on Friday, contrary to analysts’ warnings that it is an “economic side show” and a bad hedge against falling stock prices .

The world’s most popular cryptocurrency jumped to a high of $ 56,399.99, posting a weekly gain of 14%. It has gone up nearly 70% so far this month and eventually went up at 8% at $ 55,664.

The benefits of Bitcoin are driven by signs that it is gaining acceptance among investors and mainstream companies, from Tesla Inc. and Mastercard Inc. to BNY Mellon.

Together, each digital coin has a market potential of around $ 1.7 trillion.

“If you truly believe that bitcoin is a source of value, there is 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 potential of $ 9 (trillion) or $ 10 trillion. Even if bitcoin gets half the gold market cap, that still grows 4X, or $ 200,000. So I don’t know when it stopped rising, ”he said.

The next milestone will pass Alphabet Inc., which is currently valued at $ 1.431 trillion, said Jacob Skaaning, portfolio manager at crypto hedge fund ARK36.

“There may be big changes along the way, but I am still very bullish and I believe the uptrend will continue for now,” he said.

However, many analysts and investors remain skeptical about the wrapped digital asset, which is only used for trading.

Analysts at JP Morgan said current bitcoin prices were well above estimates of fair value. Mainstream adoption increases bitcoin’s relationship with revolving assets, which rises and falls with economic changes, thereby reducing the benefits of diversification into crypto, the investment bank said in a memo.

“Crypto assets continue to rank as the poorest hedge for large drawdowns in shares, with questionable multiplier benefits at prices so far above yield costs, while relationships with revolving assets rise as property crypto is mainstreamed, ”said JP Morgan.

Bitcoin is an “economic showcase,” he said, calling for innovation in financial technology and the growth of digital platforms to credit and payments “the true financial transformational story of the COVID-19 era.”

Other investors said this week that the volatility of bitcoin is an obstacle to becoming a widespread payment method.

On Thursday, Tesla chief Elon Musk – whose tweets have sparked a bitcoin rally – said owning the digital coin was only slightly better than keeping money. It also defended Tesla’s recent purchase of $ 1.5 billion worth of bitcoin, which ignited mainstream interest in the digital currency.

Proponents of Bitcoin argue that a cryptocurrency is a “digital gold” that can hedge against the risk of inflation stemming from a large central bank and government stimulus package designed to counter COVID-19.

But bitcoin would have to rise to $ 146,000 in the long run for its market potential to equal the private sector’s total investment in gold through trading funds or bars and coins, according to JP Morgan.

Rival’s cryptocurrency ether also hit a record high of $ 1,974.99 on Friday, and eventually rose 1.2% at $ 1,961.32, after launching futures on the Chicago Mercantile Exchange.

Bitcoin’s rise to crypto-related stocks also expanded, such as Silvergate Capital Corp., which was up 8.2%, cryptocurrency miner Riot Blockchain, 13.5% higher, and Marathon Patent Group, up 7.3%.

Shares of Overstock.com, an online retailer and blockchain tech investor, gained 4.1%; while MicroStrategy Inc., a bitcoin buyer and business information software company, advanced 4.1%.