Bitcoin Soars Amid Increasing Institutional Participation, Regains $1 Trillion Market CapIn early trading on Tuesday, Bitcoin’s market capitalization surpassed the $1 trillion mark for a second time. The world’s leading cryptocurrency had earlier reached an all time high of $58,332 on February 21st.
Some of Bitcoin’s recent strength has been attributed to participation from large institutional investors and purchases from companies such as Tesla (TSLA) and Square (SQ). According to a filing in February, Tesla purchased $1.5 billion of Bitcoin, while Square announced the purchase of $50 million of Bitcoin in October of 2020.
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On Monday, PayPal (PYPL) announced that it will buy Curv, a cryptocurrency security firm that offers a cloud-based wallet. Last October, Bitcoin received a major boost when Paypal announced the launch of a new service enabling its customers to buy, hold and sell cryptocurrency directly from their account. The company also signaled plans to make Bitcoin available as a funding source for purchases at its merchants.
In January, JP Morgan released a note to clients putting a “theoretical” long term price target on Bitcoin of $146,000 as it increasingly competes with gold. However, the bank’s strategists noted that Bitcoin’s volatility would need to drop substantially to give institutional players enough confidence to make large investments. In a note on Monday, Evercore ISI strategist Rich Ross wrote that Bitcoin is in a “strong position” to reach $75,000.
Meanwhile, noted Bitcoin bear Nouriel Roubini made his case against Bitcoin in a recent interview with Yahoo Finance. He said: ‘The reality is that nobody knows what the value of this pseudo asset is. It doesn’t have any value because it doesn’t have any income, it doesn’t have any use, doesn’t have any utility, so it’s a total speculative play on a bubble that is self-fulfilling. And now we have, like in 2017, hundreds of thousands of retail suckers that are having FOMO (fear of missing out) going into this asset class. And they’re going to buy the peak like it happened in December of 2017, when Bitcoin was $20,000 and it fell to $3,000 by the end of the next year.’
Global central banks have been easing monetary policy to help revive economies hit by the coronavirus pandemic. Loose monetary policy and quantitative easing erodes the value of fiat currencies, arguably adding to the appeal of Bitcoin. Being capped at 21 million coins, some point to Bitcoin as a legitimate hedge against inflation.
Looking at the daily chart we can see that Bitcoin has entered a fifth day of gains and is holding above the key psychological level of $50,000. Bulls now eye a potential breakout above the record high of $58,332.
By Dan Blystone, TradersLog.com
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