Bitcoin crossed the $50,000 mark for the first time on Tuesday, nearly a decade after the world’s oldest cryptocurrency hit the $1 mark on 9 February 2011.
The latest leg of the rally, which comes even as India prepares to ban private cryptocurrencies, follows sustained interest from major global institutions.
Companies such as Tesla, MasterCard, PayPal, MicroStrategy and Apple recently adopted bitcoin into their ecosystems.
The digital currency hit a record $50,350.06 before paring some of the gains to trade at $49,425.17, up 3.6% at around 8.50pm IST, according to cryptocurrency tracker CoinGecko.
In rupee terms, it topped the ₹37 lakh level on crypto-exchange WazirX.
At its peak level, bitcoin commanded a market capitalization of $938 billion, making it more valuable than Tesla and Facebook.
In comparison, Apple has a market valuation of more than $2.2 trillion, followed by Saudi Aramco at $2.03 trillion, Microsoft at $1.80 trillion and Amazon.com Inc. at $1.60 trillion.
According to industry experts, price movement in bitcoin is being fuelled by demand from retail as well as institutional investors.
“In the near future, we will see 60, 70, and $100,000. Bitcoin is an inflation-proof, corruption-resistant store of value backed by more reliable and transparent accounting. Bitcoin isn’t a bubble, it’s a part of our economy now,” said Vikram Rangala, chief marketing officer at ZebPay.
In December, bitcoin had crossed the $24,000 mark and by the beginning of 2021, it had jumped to the $40,000 level, putting its year-to-date return at close to 70%.
The nature of the demand for bitcoin has transformed over the past few weeks. Earlier, it was considered as a hedge and a portfolio diversification tool, while recently, it has made inroads into traditional finance.
“With major institutions such as Tesla, MasterCard, PayPal and MicroStrategy adopting bitcoin into their ecosystem, we are witnessing a continuous rise in demand, thus, pushing the valuation higher. We expect the trend to continue in the form of investments in these digital assets with the induction of newer products built around bitcoin,” said Sumit Gupta, CEO and co-founder, CoinDCX.
Bitcoin prices surged around 18% after the US electric-car maker Tesla disclosed a $1.5 billion holding in bitcoin last week, making it by far the biggest company yet to back the cryptocurrency.
“The price growth had started gaining momentum since the news of Tesla buying $1.5 billion worth of bitcoin came out. Bitcoin’s continuous price growth is a testament to the fact that more and more institutions are now seeing it as digital gold, and as a hedge against market volatility,” said Nischal Shetty, CEO, WazirX.