Bitcoin smashed $ 40,000 to a new high on Thursday, helping to lift the total value of the entire cryptocurrency market above $ 1,000 billion for the first time.
The digital coin hit an all-time high of $ 40,367 around 1:17 p.m. ET, just hours after breaking the $ 39,000 level, according to data from Coin Metrics.
Bitcoin slashed some of its gains after hitting a record high, last trading at $ 38,885, up 9.1% from the previous day. The cryptocurrency has grown over 30% since the start of 2021 and over the past 12 months has jumped 400%.
Social Capital’s Chamath Palihapitiya believes digital currency has a long way to go even after its massive rally.
“It’s probably going to be $ 100,000, then $ 150,000, then $ 200,000,” Palihapitiya told CNBC. “Half-time report. “” At what period? I do not know. [Maybe] five or 10 years, but it’s okay there. “
“The reason [it’s going there] That’s because, every time you see all of this happening, it reminds you that our leaders aren’t as trustworthy and reliable as they used to be, “he said.” So just in case , we really need to have an assurance we can keep under our pillow that gives us access to an uncorrelated hedge. “
The value of the entire cryptocurrency market, which is made up of bitcoin and other digital coins like ether and tether, topped $ 1,000 billion for the first time earlier on Thursday, according to the reports. data from Coinmarketcap. Bitcoin is by far the most dominant cryptocurrency, with a market value of over $ 700 billion.
The resurgence of Bitcoin has been attributed to a number of factors, including more purchases from large institutional investors. Leading investors like Paul Tudor Jones, for example, have bought the digital currency.
Many bitcoin bulls say the cryptocurrency is akin to “digital gold,” a potential safe haven asset and a hedge against inflation. In a recent research note, JPMorgan said bitcoin could reach $ 146,000 in the long term because it competes with gold as an “alternative” currency. Investment banking strategists noted, however, that bitcoin would need to become significantly less volatile to reach this price. Bitcoin is known for its wild price swings.
The idea of bitcoin as an inflation hedge has continued to gain momentum as governments around the world embark on large-scale fiscal stimulus programs. Analysts argue it could cause inflation to spike.
“This latest bull run in January will certainly catch the attention of asset managers to diversify their assets even further into crypto as they are keen to find alternative investments, such as cryptocurrency or gold. , to hedge inflation and geopolitical risks, ”Simons Chen, executive director of investment and trading at cryptocurrency financial services firm Babel Finance, told CNBC.
“A large number of retail investors have also joined the race recently because they fear missing out on opportunities to make easy and quick gains from the latest bull run,” he added.
The rise of Bitcoin has also been aided by the movements in the space of large financial companies like Pay Pal and loyalty. Last year, PayPal launched a feature that allows its users to invest in cryptocurrencies and plans to offer crypto payments on its extensive network of retailers later this year.
Anthony Pompliano, co-founder of crypto hedge fund Morgan Creek Digital, said bitcoin has recently gained more acceptance as a payment method. The total transaction volume of bitcoin in 2020 was higher than that of Venmo, PayPal or Apple Pay, he said.
“There was more use of bitcoin payment rails than some of the more popular fintech products,” he told CNBC’s “Street Signs Europe”.
“Bitcoin is in the process of moving from what was once a contrarian or contrarian trade to consensus trading. I think that’s where you get that revaluation of the asset and the rapid price appreciation, as more and more people on Wall Street get into the asset and want exposure. “
But some critics of bitcoin – like David Rosenberg, economist and strategist at Rosenberg Research – called Bitcoin a bubble.
“The parabolic movement of bitcoin over such a short period, I would say for all safety, is highly abnormal,” Rosenberg told CNBC earlier this month.