The world’s most popular cryptocurrency jumped to an all-time high above $ 54,000, putting it on track for a weekly jump of more than 11%. It’s up about 64% so far this month and is up 5.5% to $ 54,405.
Bitcoin’s gains have been fueled by signs that it is gaining acceptance among major investors and companies, from Tesla and Mastercard to BNY Mellon.
All digital currencies combined have a market capitalization of around $ 1.7 trillion.
“If you really believe that there is a store of value in bitcoin, then there are still many advantages,” 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 capitalization of $ 9 or $ 10 trillion. Even if bitcoin hits half the market capitalization of gold, that growth is still 4X, or $ 200,000. So I don’t know when does it stop climbing, “he said. additional.
Still, many analysts and investors remain skeptical of the highly volatile and irregularly regulated digital asset, which is little used for trading.
JP Morgan analysts said current bitcoin prices were well above fair value estimates. Widespread adoption increases bitcoin’s correlation with cyclical assets, which rise and fall with economic changes, which in turn reduces the benefits of diversifying into cryptocurrencies, the investment bank said in a memo.
“Crypto assets continue to rank as the poorest hedge for major declines in equities, with questionable diversification benefits priced well above costs of production, while correlations with cyclical assets are increasing as it is incorporated. crypto ownership, “JP Morgan said.
Bitcoin is an “economic spectacle,” he added, calling the innovation in fintech and the growth of digital platforms in credit and payments “the true financial transformation story of the Covid-19 era.”
Other investors said this week that bitcoin’s volatility presents an obstacle for it to become a widespread means of payment.
On Thursday, Tesla boss Elon Musk, whose tweets have fueled the recovery of bitcoin, said that owning the digital currency was only slightly better than having cash. He also defended Tesla’s recent purchase of $ 1.5 billion in bitcoin, which sparked general interest in the digital currency.
Proponents of Bitcoin argue that the cryptocurrency is “digital gold” that can hedge against the risk of inflation brought on by massive central bank and government stimulus packages designed to counter Covid-19.
However, Bitcoin would need to rise to $ 146,000 in the long run for its market capitalization to match the total private sector investment in gold through exchange-traded funds or bars and coins, according to JP Morgan.
The rival cryptocurrency’s ether was down 0.3% to $ 1,934.67, still close to the record high of $ 1,951 reached on Friday. It has been lifted by growing institutional interest after its futures were launched on the Chicago Mercantile Exchange.
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