Bitcoin Hits $1 Trillion Value as Crypto Jump Tops Other Assets

Bitcoin Hits $1 Trillion Value as Crypto Jump Tops Other Assets

(Bloomberg) – Bitcoin’s market value reached $1 trillion for the first time, a surge that’s helping cryptocurrency returns far outstrip the performance of more traditional assets like stocks and gold.

The largest digital-asset has added more than $450 billion of value in 2021 to more than $1 trillion, data compiled by Bloomberg show. The Bloomberg Galaxy Crypto Index, which includes Bitcoin and four other coins, has more than doubled.

Speculators, corporate treasurers and institutional investors are thought to have stoked Bitcoin’s volatile ascent. Crypto believers are dueling with skeptics for the dominant narrative around the climb: the former see an asset being embraced for its ability to hedge risks such as inflation, while the latter sense a precarious mania riding atop waves of monetary and fiscal stimulus.

At the same time, the argument has been made that assigning a market capitalization isn’t an accurate representation since Bitcoin isn’t a company or even an asset. Skeptics say without real-world assets that companies possess or government backing like the dollar, all investors are really buying into is faith in the cryptocurrency’s network.

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

The crypto index’s performance towers over stocks, gold, commodities and bonds in 2021.

This month, Tesla Inc. disclosed a $1.5 billion investment and MicroStrategy Inc. boosted a sale of convertible bonds to $900 million to buy even more of the token. That brought the coin closer to corporate America.

“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, senior market analyst with Oanda Europe Ltd.

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Tesla Chief Executive Officer Elon Musk posted a somewhat cryptic tweet Friday that appeared in part to defend the company’s action, saying Bitcoin “is simply a less dumb form of liquidity than cash” while adding that the electric vehicle maker’s decision isn’t “directly reflective of my opinion.”

Read More: Musk Defends Tesla Bitcoin Move, Says Token Less Dumb Than Cash

The “long Bitcoin” trade is seen as among the most crowded in the world alongside technology exposure and dollar shorts, according to the February edition of Bank of America’s global fund manager survey.

AMP’s Oliver said 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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Bitcoin market value tops $1 trillion for first time ever as crypto price soars

The world’s No. 1 cryptocurrency hit a record high on Friday, propelling it to a market value above $1 trillion for the first time ever.

A single bitcoin BTCUSD, +0.12% jumped to a record at $$53,910.44, based on prices tracked by CoinDesk, briefly bringing its total market capitalization to a peak at $1,002,547,798,785, according to data from research company CoinMarketCap.com.

via CoinMarketCap.com

Bitcoin was last up 4% on Friday at around $53,734, and has surged over 85% since the beginning of 2021. By comparison, gold prices GC00, +0.46% , which bitcoin often competes against for investment dollars, are down nearly 6% so far this year.

Meanwhile, the S&P 500 index SPX, -0.19% is looking at a year-to-date gain of 4.5%, the Dow Jones Industrial Average DJIA, +0.00% is up 3.3% and the Nasdaq Composite Index COMP, +0.07% is looking at a gain thus far in the year of over 8%.

“Bitcoin price reaching the 1 trillion dollar is the most exciting news of this year,” wrote Naeem Aslam, chief market analyst at AvaTrade, in an emailed note. “This was long coming and the fact is that we are only 10X away from flipping the gold market cap on its head,” he said.

The ascent of the digital asset created just 12 years ago by a person or persons known as Satoshi Nakamoto has been attributed to growing institutional interest in bitcoin and other alternative cryptographically backed assets.

The fervor for bitcoins was given a fresh spark earlier this month when Elon Musk’s Tesla Inc. TSLA, -0.77% said that it has acquired $1.5 billion in bitcoins in January and that it could accept the world’s No. 1 digital asset for payment in the future.

Late Thursday, Musk via a tweet, further explained his rationale for getting exposure to bitcoins, describing the decision as “simply a less dumb form of liquidity than cash, is adventurous enough for an S&P500 company.”

Other institutions including PayPal Holdings Inc. PYPL, which back in November opened up its cryptocurrency platform to all U.S. customers after conducting a more narrow rollout, has helped drive bitcoin prices sharply higher in recent weeks and months.

And several high-profile Wall Street investors, including Stanley Druckenmiller and Paul Tudor Jones, have embraced bitcoin. Famed investor Bill Miller, founder of Miller Value Partners, in a letter to clients earlier this month published on the firm’s website, reaffirmed his bullish outlook on bitcoin.

One point worth noting is that despite the parabolic move in bitcoins in the recent period its dominance, its share of market value compared against other alternative digital assets, is just around 60%, down from a recent peak around 70% at the start of the year.

Switzerland’s ‘Crypto Valley’ Has Started Accepting Bitcoin, Ether for Tax Payments

The Swiss canton of Zug has started accepting tax payments in cryptocurrency.

In a previous announcement in 2020, the Swiss authorities said that, from February, citizens and companies based in Zug will be able to pay up to 100,000 CHF (around $111,300) of their taxes in either bitcoin or ether. No partial payments in cryptocurrency will be accepted.

Zug has been dubbed “Crypto Valley” over the many industry companies drawn to the jurisdiction over its friendly blockchain and crypto regulation.

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“As the home of the Crypto Valley, it is important to us to further promote and simplify the use of cryptocurrencies in everyday life,” said Zug’s finance director, Heinz Tannler, when the tax initiative was announced.

Zug-based crypto broker and custodian Bitcoin Suisse has partnered with the canton, converting cryptocurrency payments into Swiss francs for the tax office.

According to the Zug Canton website, residents can request to pay taxes in cryptocurrency and will be emailed a link taking them to the crypto payment option.