Bitcoin’s astonishing rally catapulted it to a market capitalization of $1 trillion for the first time on Friday, shrugging off concerns of a dramatic collapse reminiscent of 2017 when the famous cryptocurrency fell almost 45% after hitting all-time highs.
Bitcoin on Friday touched a high of $53,262 on the Coinbase exchange.
The cryptocurrency’s 60% surge this month has outperformed by far the growth of traditional assets from stocks to gold. The cryptocurrency has added more than $415 billion of value this year alone, data compiled by Bloomberg show.
“Bitcoin’s market cap hitting $1 trillion demonstrates the mainstreaming of cryptocurrency as a store of value” said Adam Liposky, Ecosystem Operations Lead at Pocket Network, a blockchain data ecosystem for Web3 applications. “Most of us in the market view this milestone as validation for the entire market.”
The cryptocurrency now joins a rarified trillion-dollar market capitalization club with the likes of Amazon, Microsoft, Apple, and Alphabet.
“From white paper to $1 Trillion. #Bitcoin is eating gold alive,” tweeted Gemini’s Cameron Winklevoss.
Pundits have long criticized the cryptocurrency’s price volatility and rapid ascent. Many fear it’s a bubble waiting to burst.
Analysts at JPMorgan said have pointed to the fluctuating price of bitcoin as a problem. They said bitcoin was far more volatile than gold, which has often been pitted against the cryptocurrency.
“In our opinion, unless bitcoin volatility subsides quickly from here, its current price looks unsustainable,” the analysts said.
Yet, bitcoin in recent weeks has gained the acceptance of major institutions, including BlackRock, BNY Mellon, and Mastercard. Elon Musk’s Tesla earlier this month revealed that it bought $1.5 billion of the cryptocurrency in January.
“There are a number of reasons why Bitcoin is soaring,” Nicholas Pelecanos, head of trading at blockchain company NEM, told Insider. “But what stands out most is the trend that Microstrategy started and Tesla popularized: moving institutional balance sheets into Bitcoin to hedge against inflation.”
Underlying Bitcoin’s rally is the stimulus packages that governments and central banks have distributed to help with a global recovery, which, analysts said, have lifted nearly all markets.