The cryptocurrency craze has topped new records, with bitcoin’s market valuation surpassing $1 trillion, according to a CNBC report on Friday (Feb. 19).
Bitcoin traded at almost $54,000 per coin on Friday, up more than 3 percent over the previous day and more than 350 percent over the past six months. Before this escalation, the crypto asset never topped $20,000 in trading.
The acceleration was partially triggered by the mainstream adoption of bitcoin by legacy investors and financial institutions (FIs) like the Bank of New York Mellon. Elon Musk’s Tesla also added to the frenzy when it invested in bitcoin and said it would accept the digital currency as payment.
The market value of cryptocurrency is calculated by multiplying the coin’s price by the number created, the article said. With bitcoin’s $1 trillion market value, it would surpass most stocks worldwide. Tesla, for instance, has a market cap of around $700 billion, while Apple is valued at more than $2 trillion.
Many on Wall Street are wary of bitcoin’s future prospects, as well as the prospects of cryptocurrency as a whole. Citadel Securities Founder Ken Griffin has no interest in crypto, and J.P. Morgan doesn’t believe the bitcoin rally is sustainable over the long term. Bitcoin’s price fluctuations make it an unstable investment, J.P. Morgan said. “Crypto assets continue to rank as the poorest hedge for major drawdowns in equities,” analysts said. But some crypto backers said bitcoin is like “digital” gold and is a solid investment amid growing inflation and a declining dollar value.
Nobel Prize economist Paul Krugman has previously said that cryptocurrency is not economically relevant due to scarcity value and other factors. Bitcoin’s 2020 value boost can be traced partially to the 50 percent cut in the supply of new bitcoins being created.
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