Bitcoin’s market value exceeds $1tn after price soars

Technology

Bitcoin hit a new high on Friday, giving it a market value of more than $1tn for the first time.

Bitcoin rose 6.4% during trading on Friday to reach an all-time high above $55,000, and was on track for a weekly gain of about 14%.

The surge took its market capitalisation – the value of all bitcoin in circulation – to more than $1tn, according to the data website CoinMarketCap.

On Wednesday, bitcoin burst through the $50,000 mark for the first time, as it continued to attract interest from mainstream investors and acceptance from financial institutions.

Bitcoin has enjoyed a meteoric rise in 2021, gaining more than 60% during the month of February alone.

Its popularity has been boosted in recent weeks by high-profile purchases by the electric car company Tesla, run by the billionaire Elon Musk, while the US bank Morgan Stanley has said its investment fund is looking at a large purchase of bitcoins.

Tesla sent bitcoin’s value skywards when it revealed earlier in February it had bought $1.5bn (£1.1bn) in bitcoin and said it might soon accept payment in the cryptocurrency.

Musk has regularly tweeted that he is a supporter of cryptocurrencies, which have been favoured by some investors while global interest rates remain at record lows. He wrote on Twitter on Friday that bitcoin was a “less dumb form of liquidity than cash”.

Despite their growing popularity, digital currencies remain controversial. Regulators including the Bank of England are sceptical about cryptocurrencies on account of their volatility and vulnerability to theft or hacking.

The governor of the Bank of England, Andrew Bailey, told an online conference hosted by the World Economic Forum in January that he did not believe any existing cryptocurrencies would last in the long term.

Bitcoin has been on a rollercoaster ride in the last few years. In March 2020 it was trading below $6,000. In 2016 a single coin was worth less than $400.

Neil Wilson, the chief market analyst at the financial trading platform Markets.com, noted that bitcoin had received “yet more institutional support”.

He said the boss of the US investment firm DoubleLine Capital, Jeffrey Gundlach, a longtime proponent of investing in gold, “is backing bitcoin as the asset to insulate investors against the great monetary inflation”.