Bitcoin, the largest cryptocurrency reached a price $58,000 with total market value surpassing $1tn, as prices continued to grow exponentially. Since the start of 2021 the value of the digital asset has risen by over 90%.
This is a new high for the cryptocurrency has risen from a value of $11,000 in September 2020 and less than $1,000 four years ago. However, it has been prone to fluctuation. The most recent dip was in January this year when the price declined from $40,000 to $30,000 highlighting its volatility.
Other crypotcurrencies have also seen growth. Ethereum, the second largest cryptocurrency, eclipsed a price of $2,000 per token with a total valuation of $226bn.
Also dogecoin, a cyptocurrency set up in 2013 after an internet meme, has seen its value rise after a social media campaign which garnered celebrity attention. Support from the likes of Snoop Dogg and Elon Musk saw it break into the top ten cryptocurrencies at the weekend.
Business and financial interest in cryptocurrency is growing
The rise can be attributed to a number of factors such as interest from big businesses and Wall Street, as well as retail traders buying en masse. Last week Elon Musk announced that Tesla, his electric car company, would accept bitcoin payment for their vehicles as well as purchasing $1.5bn of the currency itself.
If Tesla still owns the bitcoins it had on 31 January, it will have made a paper profit of about $930 million form the investment. This is more than its total 2020 reported annual profit of $721 million profit.
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The Tesla purchase drove huge interest from retail traders who flocked to the currency sending its price even higher. Additionally, Mastercard announced plans to accept the cryptocurrency as a form of payment which would make it more accessible for the average user.
New York based bank, BNY Mellon, which holds over $2tn in assets, declared it was exploring possibilities of holding bitcoin and other cryptocurrencies for its clients. Further to this, Blackrock, the world’s largest asset manager, is looking to ways to utilize the digital currency as Wall Street begins to take note.
Bitcoin is clearly now attracting the interest of the largest businesses and financial institutions worldwide. However, whether it can infiltrate society to become a popular way of spending money in the coming years is still to be seen.
Bitcoin supporters see this a platform for expansion – critics await a crash
Bitcoin supporters have stated that the landmarks achieved this month and hugely significant for the future of the cryptocurrency with many expecting further rise.
Cory Klippsten, the chief executive of bitcoin-buying app Swan Bitcoin, stated that eclipsing $1tn valuation will cause asset managers to take note. Further adding that this is merely a “drop in the bucket” with the digital asset’s “total addressable market in the $200 trillion to $400 trillion range”.
However, critics have questioned its real world use as a currency instead labelling it a speculative trading tool prone to market manipulation which is likely to crash once more. For example, American economist, Nouriel Roubini tweeted “Elon Musk may be buying it but that doesn’t mean everyone else should follow suit”.
The view on bitcoin, and cryptocurrencies in general, is still divided but if its price continues to follow a similar trajectory its influence will undoubtedly continue to grow.