The total market value of cryptocurrencies surpassed $1 trillion (roughly Rs. 73,12,050 crores) for the first time Thursday amid a frenzied and volatile rally in Bitcoin to yet another record.
Cryptocurrencies hit the milestone after a fivefold climb in market value in the past year, data from tracker CoinGecko shows. Strategists have cited demand from speculative retail traders, trend-following quant funds, the rich and even institutional investors as among the reasons for the surge.
Bitcoin rose as much as 4 percent on Thursday to top $37,000 (roughly Rs. 27 lakhs) and has more than quadrupled in the past year, according to a composite of prices compiled by Bloomberg. It accounts for about two-thirds of cryptocurrency market value, followed by Ether on about 14 percent. Ether is up 62 percent so far this year.
Digital coins are jumping in a world awash with fiscal and monetary stimulus, even as some commentators fear an inevitable bust and others question the basic integrity of crypto markets. Proponents of Bitcoin argue it offers a hedge against dollar weakness and the risk of faster inflation, a bit like gold, while critics decry the intellectual soundness of comparing the two assets.
Active Bitcoin accounts are nearing their all-time high levels of late 2017, according to researcher Flipside Crypto – possibly a sign that some holders are planning to sell. Fewer than 2 percent of accounts hold 95 percent of Bitcoin supply, so a few big trades can impact prices. The last big Bitcoin boom began imploding in late 2017.
Some traders pointed to JPMorgan Chase’s long-term Bitcoin price forecast of $1,46,000 (roughly Rs. 1 crore) as possibly fueling the rally. Others said sentiment was boosted by a US regulatory update that allows a class of less volatile coins to be used by banks for payments.
– With assistance from Lynn Thomasson.
© 2021 Bloomberg LP
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