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Bitcoin hits $1trn market capitalisation, surges to $56,000

By News Desk

Inspite of experts’ prediction on the world’s most popular cryptocurrency, Bitcoin, its market capitalization has surged above $1 trillion, with the price jumping to an all-time high of over $56,399, posting a weekly gain of 14 percent after surging nearly 70 percent so far this month.

The new height countered analyst warnings that it was an economic side show and that it was a poor hedge against a fall in stock prices even after it was $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.

On the new development, the president of AVA Labs, an open-source platform for creating financial applications using blockchain technology, John Wu, said that no one could predict when Bitcoin would stop rising.

“If you really believe there’s a store of value in bitcoin, then there’s still a lot of upside. If you look at gold, it has a market cap of $9 or $10 trillion. Even if bitcoin gets to half of gold’s market cap, that’s still growth of 4X, or $200,000. So I don’t know when it stops rising,” he added.

A portfolio manager at crypto hedge fund ARK36, Jacob Skaaning, disclosed that the next milestone for the currency would be overtaking Alphabet Inc, currently valued at $1.431 trillion.

“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 was 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.

“Crypto-assets continue to rank as the poorest hedge for major drawdowns inequities, with questionable diversification benefits at prices so far above production costs, while correlations with cyclical assets are rising as crypto ownership is mainstreamed,” JP Morgan said.

Bitcoin is an “economic sideshow,” it added, calling innovation in financial technology and the growth of digital platforms into credit and payments “the real financial transformational story of the COVID-19 era.”

Other investors this week said bitcoin’s volatility presents a hurdle for it to become a widespread means of payment.

Earlier in the week, Tesla boss, Elon Musk, whose tweets have fueled bitcoin’s rally, said owning the digital coin was only a little better than holding cash. He also defended Tesla’s recent purchase of $1.5 billion of bitcoin, which ignited mainstream interest in the digital currency.

Bitcoin proponents argue the cryptocurrency is “digital gold” that can hedge against the risk of inflation sparked by a massive central bank and government stimulus packages designed to counter COVID-19.

Yet bitcoin would need to rise to $146,000 in the long-term for its market cap to equal the total private-sector investment in gold via exchange-traded funds or bars and coins, according to JP Morgan.

Rival cryptocurrency ether also hit an all-time peak of $1,974.99 on Friday, and was last up 1.2 percent at $1,961.32, after its futures were launched on the Chicago Mercantile Exchange.

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

Shares of, an online retailer and blockchain tech investor, gained 4.1 percent; while MicroStrategy Inc, a bitcoin buyer and business intelligence software firm, advanced 4.1 percent.

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