Bitcoin’s market value reached $1 trillion for the first time, according to the Bloomberg Galaxy Crypto Index.
The cryptocurrency added more than $450 billion of value in 2021 to reach approximately $1 trillion, in a surge way beyond the performance of conventional assets such as gold, stocks, commodities and bonds.
The world’s most popular cryptocurrency jumped to an all-time high at $54,405.
Bitcoin’s gains have been boosted by signs of widespread acceptance among American investors and corporations, after Elon Musk announced this month Tesla’s purchase of $1.5 billion of bitcoin and MicroStrategy Inc. boosted a sale of convertible bonds to $900 million to buy more of the digital currency.
Yet, Bitcoin would need to rise to $146,000 in the long-term for its market cap to equal the total private-sector investment in gold via exchange-traded funds or bars and coins, according to JP Morgan.
Shane Oliver, head of investment strategy with AMP Capital Investors Ltd, 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.
How Bitcoin works?
Bitcoin is a digital currency that is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who “mine” them by lending computing power to verify other users’ transactions. They receive bitcoins in exchange. The coins also can be bought and sold on exchanges with US dollars and other currencies. Some businesses also accept bitcoin, but its popularity has stalled out in recent years.
Can you use Bitcoin to buy things?
The digital currency has become popular enough that more than 300,000 transactions typically occur in an average day, according to bitcoin wallet site blockchain.info. Still, its popularity is low compared with cash and credit cards.