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The bitcoin price scaled new heights above $53,000 on Friday morning, taking its year-to-date gains to 81% as the breakneck rally powered ahead.
The increase took bitcoin’s market capitalization to within touching distance of $1 trillion, at more than $980 billion. The world’s biggest cryptocurrency has added more than $400 billion of value just in 2021.
Bitcoin (BTC) traded at $53,038 as of 10.10 a.m. ET, having risen around 1.9% over the previous 24 hours. It earlier touched a high of $53,262 on the Coinbase exchange.
Elon Musk’s Tesla triggered the latest climb higher, after it revealed earlier in February that it had bought $1.5 billion of bitcoin in January and intended to accept it as payment.
Musk on Thursday night defended Tesla’s move, saying: “When fiat currency has negative real interest, only a fool wouldn’t look elsewhere.”
Dmitry Tokarev, chief executive of crypto custodian Copper, said: “While it is true that Bitcoin may be volatile, in a world of zero or negative nominal interest rates, it offers unparalleled return opportunities.
“The price of Bitcoin has quintupled in just over a year – from a little more than $7,500 at the end of 2019 to over $52,800 today.”
Underlying the rally, analysts say, are the huge amounts of stimulus governments and central banks have funneled into economies during the coronavirus crisis which have lifted nearly all markets.
Some other big-name companies have started to sniff around bitcoin in recent weeks, adding legitimacy to the crypto world.
BlackRock has authorized two of its funds to invest in bitcoin futures. On Thursday, the asset manager’s investment chief Rick Rieder told CNBC that BTC was increasingly attractive to many investors.
Yet not everyone is convinced. NYU economist Nouriel Roubini on Wednesday told Bloomberg that he thinks bitcoin “is a bubble.”
He said: “Fundamentally, bitcoin is not a currency. It’s not a unit of account, it’s not a scalable means of payment, and it’s not a stable store of value.” He said that “the Flintstones had a better monetary system than bitcoin.”
However, Katharine Wooller, managing director at UK digital asset exchange Dacxi, said: “Many asset managers, hedge funds, and tier one banks now consider crypto an asset class – albeit an alternative one.
“For the first time, thanks to Mr Elon Musk, treasuries are considering swapping some of their cash to crypto to hedge against inevitable inflation. Be warned however, bitcoin is known to significantly correct, as indeed it did in January, by up to 20%.”