On Thursday morning, the bitcoin price held above $51,000 after hitting a record high on Wednesday of over $52,600.
As recently as March 2020, bitcoins meteoric rise under $4,000 means that the largest cryptocurrency is not far away from a market capitalization of $1 trillion.
On the Coinbase exchange, the Bitcoin price (BTC) fell slightly to $51,527 over the 24 hours on Thursday. That brought gains to around 75% year-to-date.
Analysts say the massive quantities of cash poured into economies by governments and central banks during the coronavirus crisis has been a major factor. Bitcoin proponents also state that if the record amounts of stimulus push up inflation and erode the buying power of fiat currencies such as the dollar, the cryptocurrency will serve as a store of value.
Elon Musk announced earlier this month that Tesla purchased $1.5 billion of the token in January. Cryptocurrencies have also warmed up to companies like BlackRock, BNY Mellon, and Mastercard.
“There are a number of reasons why Bitcoin is soaring, but what stands out most is the trend that Microstrategy started and Tesla popularized: moving institutional balance sheets into Bitcoin to hedge against inflation,” said Nicholas Pelecanos, head of trading at blockchain company NEM.
“This is just the start of a trend which could see billions of dollars flow into the crypto space over the course of 2021.”
The increase of Bitcoin to about $52,000 has brought the total market cap of the cryptocurrency to over $950 billion.
“As Bitcoin crossed the $50,000 mark, many investors have their eyes set firmly on the next big milestone – a trillion-dollar market cap” said Richard Byworth, chief executive of the Diginex crypto exchange company.” Adding that this would come if bitcoin hit about $54,000.
Bitcoin has deeply divided the financial community, even with analysts and investors seeing the digital currency as useless and bound to fail as it has in the past.
On Wednesday, NYU economist Nouriel Roubini told Bloomberg 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.”