Bitcoin’s market value reached $1 trillion for the first time on Friday, smashing through $56,000 as investors and backers including Elon Musk and Tesla (TSLA) – Get Report pushed the world’s biggest digital token into record territory.
At last check, bitcoin traded at $56,078, up 7.79%, according to CoinDesk. The largest token has added more than $415 billion of value in 2021, far higher returns than other assets like stocks and gold, according to data compiled by Bloomberg.
Bitcoin’s meteoric rise has been fueled in part by speculators betting it will be the dominant digital currency, but also by institutional investors who are buying into the idea that bitcoin specifically is “digital gold” – an asset class that has equal if not great chances of retaining its value, and in turn being a hedge against risks such as inflation.
Tesla founder and co-CEO Elon Musk defended Tesla’s $1.5 billion investment in bitcoin on Friday saying in a tweet that it is “simply a less dumb form of liquidity than cash,” adding that the electric vehicle maker’s decision isn’t “directly reflective of my opinion.”
To be clear, I am not an investor, I am an engineer,” Musk said on Twitter. “I don’t even own any publicly traded stock besides Tesla.”
Other corporate players including Bank of New York Mellon BK have said they will now allow clients to hold bitcoin in their portfolios. And business software company MicroStrategy MSTR announced this week that it was issuing $600 million in bonds to buy bitcoin.
Meantime, Purpose Investments’ Purpose Bitcoin ETF, the first North American exchange-traded fund for bitcoin, officially began trading on Thursday. The fund opened at C$10.59 (US$8.35) on volume of 9.3 million shares. It last traded at C$9.94 o the Toronto Stock Exchange.
“We believe the story and theme here is much larger than just investing in bitcoin and predicting its future price, but rather around the potential ramifications that crypto, blockchain, and bitcoin could have across the technology and corporate world for the next decade,” Wedbush Securities’ Dan Ives said in a research note on Friday.
From Paypal (PYPL) – Get Report, and Square (SQ) – Get Report, to the likes of Nvidia (NVDA) – Get Report, Tesla, IBM (IBM) – Get Report, Visa (V) – Get Report, Mastercard (MA) – Get Report, we believe the trend of transactions, bitcoin investments, and blockchain-driven initiatives could surge over the coming years as this bitcoin mania is not a fad, in our opinion, but the start of a new age on the digital currency front.”