Bitcoin touches $1tn market cap; Soars above other assets

By Amirtha P S, Desk Reporter
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The world’s most popular cryptocurrency Bitcoin hit a market capitalization of $1 trillion for the first time, a surge that’s making cryptocurrency returns surpass the performance of traditional assets like stocks and gold.

The largest token has added more than $415 billion of value in 2021 to more than $1 trillion, data show. The world’s most popular cryptocurrency jumped to an all-time high of $56,399.99, posting a weekly gain of 14 percent. So far this month the digital coin has increased nearly 70 percent.

Speculators, corporate treasurers and institutional investors are thought to have stoked Bitcoin’s volatile ascent. Crypto believers are combating with skeptics for the dominant narrative around the climb, the former sees an asset being accepted for its ability to hedge risks like inflation, while the latter sense an uncertain mania rising of monetary and fiscal stimulus.

As per Shane Oliver, head of the investment strategy with AMP Capital Investors Ltd. in Sydney, “FOMO, fear of missing out may be at play. In times of easy money this gets magnified and it’s partly what’s driving the current interest.”

Bitcoin’s gains have been ignited by signs it is earning wide acceptance among mainstream investors and companies like Tesla, Mastercard and BNY Mellon. This month, Tesla revealed a $1.5 billion investment and MicroStrategy boosted a sale of convertible bonds to $900 million to buy even more of the token and this brought the coin closer to giants of America.

Last day, Tesla Chief Executive Officer Elon Musk 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, by adding that the electric vehicle maker’s decision isn’t “directly reflective of my opinion.”

“If companies’ fundamentals are going to become closely tied to movements in Bitcoin because they’ve suddenly become speculators on the side, we’re going to be in bubble territory before you know it,” said Craig Erlam, a senior market analyst with Oanda Europe Ltd.

Mr. Oliver of AMP Capital further pointed out that if Bitcoin “falls out of favor, for example, due to government regulation or investors just moving on to the next new thing, then it could quickly plunge.”

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