Bitcoin reaches a market limit of $ 1 trillion, to another record

NEW YORK / LONDON (Reuters) – Bitcoin it reached a $ 1 trillion market capitalization as it hit a record high on Friday, countering analysts ’warnings that it is an“ economic spectacle ”and poor hedging against falling stock prices.

The world’s most popular cryptocurrency jumped to an all-time high above $ 54,000, launching it by a weekly jump of more than 11%. It has risen about 64% so far this month and rose 5.5% behind, to $ 54,405.

BitcoinEarnings 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 cap of about $ 1.7 trillion.

“If you really believe that there is a very important value 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 we look at gold, it has a market cap of $ 9 billion or $ 10 trillion bitcoin it reaches half of the gold market limit, a growth still of 4X, or $ 200,000. So I don’t know when it stops increasing, ”he added.

Still, many analysts and investors remain skeptical about the unregulated and highly volatile digital asset, little used for trading.

JP Morgan analysts said bitcoinCurrent prices were well above fair value estimates. Widespread adoption is on the rise bitcoinThe correlation with cyclical assets, which rise and fall with economic changes, in turn reduces the benefits of diversifying into cryptography, the investment bank said in a note.

“Cryptographic assets continue to rank as the poorest hedge for large equity declines, with dubious advantages of price diversification so far above production costs, while correlations with cyclical assets increase as the cryptographic ownership is widespread, ”JP Morgan said.

Bitcoin is an “economic spectacle,” he added, calling innovation in financial technology and the growth of digital credit and payment platforms “the real story of financial transformation of the COVID-19 era.”

Other investors have said this week bitcoinVolatility presents an obstacle to it becoming a widespread means of payment.

On Thursday, Tesla boss Elon Musk, whose tweets have fed bitcoinThe rally – he said, owning digital currency was just a little better than holding cash. He also defended the recent $ 1.5 billion Tesla purchase bitcoin, which ignited widespread interest in digital currency.

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

However bitcoin it would have to rise to $ 146,000 in the long run for its market capitalization to match total private sector gold investment through exchange-traded funds or bars and currencies, according to JP Morgan.

Rival cryptocurrency ether traded down 0.3% to $ 1,934.67, still close to the $ 1,951 record set Friday earlier. It has been raised by a growing institutional interest, after its futures were launched on the Chicago Mercantile Exchange.

(Report by Gertrude Chavez-Dreyfuss in New York and Tom Wilson in London; edited by Dan Grebler)