Bitcoin Reaches Cryptocurrency $1 Trillion Market Cap

Apr 13, 2021

Bitcoin has reached “market capitalization” of $1 trillion, thanks to its growing acceptance among investors and companies such as Tesla and Mastercard. This event has dispelled any warnings from analysts who claim Bitcoin to be an “economic sideshow” and a “poor hedge”, should stock prices drop. 

Analysts and investors, however, still remain unimpressed and highly skeptical of Bitcoin. They maintain that cryptocurrency is “patchily regulated” and a “highly volatile digital asset,” giving it little use for commerce. 

When you combine all digital coins, the total market cap is around $1.7 trillion. 

John Wu, president of AVA Labs, which is an open-source platform for the development of financial applications using blockchain technology, said:

“If you look at gold, it has a market cap $9 or $10 trillion. Even if bitcoin gets to half of gold’s market cap, that still growth of 4X, or $200,000. So I don’t know when it stops rising.”

The Mistrust Continues

Analysts from JP Morgan maintain that the current prices of Bitcoin are well over “estimates of fair value”. They further explained that adoption at the mainstream level will only increase bitcoin’s relation to cyclical assets, which happen to climb and drop depending on economic changes. This greatly diminishes the benefits of wanting to diversify using crypto. 

JP Morgan further revealed its stance with the following statement:

“Crypto-assets continue to rank as the poorest hedge for major drawdowns inequities, with questionable diversification benefits at prices so far above production costs, while correlations with cyclical assets are rising as crypto ownership is mainstreamed,”

They argued that the innovation in financial technology and the expansion of credit and debit platforms into credit and payments is the “real financial transformational story” of the COVID-19 period.

Other investors have chimed in, stating that Bitcoin’s volatility is a major hurdle to become widely adopted as a legitimate form of payment. 

Big Names Fuel Interest In Bitcoin

Tesla’s chief-in-command, Elon Musk, has fanned the flames of interest in all things Bitcoin via his account on Twitter. He stated that owning Bitcoin was only “a little better” than holding cash.

He also went on to defend his company’s latest purchase, $1.5 billion in Bitcoin. All this and more has catapulted interest in this type of digital currency. 

Back in October of 2020, Square had made the announcement that it had purchased $50 million in Bitcoin 

Earlier this year, PayPal announced that it will purchase Curv, a cryptocurrency security firm that provides a cloud-based wallet. Bitcoin use was boosted further, as PayPal unveiled a new service where customers can buy, hold, as well as sell cryptocurrency from their account. PayPal also hinted of plans to make Bitcoin accessible as a source of funding for any purchases at its merchants. 

Fiat Currencies Losing Value?

As the pandemic left considerable economic destruction in its wake, banks have alleviated many of their monetary policies in order to stimulate any economies harshly hit. The problem with these “loose monetary policies” is that they directly contribute to decreasing the value of fiat currency. This only strengthens the appeal towards using Bitcoin.  

Since Bitcoin is currently capped at 21 million coins, many argue that Bitcoin is truly a good hedge against the effects of inflation. 

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