Bitcoin’s recent price surge pushed the largest cryptocurrency past $1 trillion in market capitalization, a threshold that might prove to be a catalyst for higher prices rather than a barrier or peak.
At press time, bitcoin was trading at $54,646.46, up 5.30% in the past 24 hours. It is only slightly down from the new all-time high at $54,711.32
“In many ways, $1 trillion marks an interesting focal point in which bitcoin goes from a magic internet money meme into a Wall Street, institutionally recognized and investable asset,” said Andrew Tu, an executive at quantitative trading firm Efficient Frontier.
At the same time, bitcoin’s one-month implied volatility – investors’ expectation of how turbulent prices will be over the next four weeks – also dropped on Friday, according to data source Skew.
“The bulls have taken hold of the markets,” said Denis Vinokourov, head of research at digital assets prime broker Bequant.
Many factors in the past week have contributed to bitcoin’s latest rally, including U.S. Treasury Secretary Janet Yellen pushing the Biden Administration’s proposal of $1.9 trillion stimulus package, MicroStrategy’s announcement it is boosting its bitcoin stash again and money manager BlackRock’s “dabbling” in cryptocurrency.
While every piece of news seems to benefit bitcoin and cryptocurrency as a whole, some are warning about potential risks of people taking profits and pushing down bitcoin’s price.
“With traders appearing to now expect announcements like these to keep coming, we may see a pullback in the near future, perhaps this weekend,” Guy Hirsch, U.S. managing director at eToro, said. “It would not be surprising to see bitcoin drop briefly below $50,000 while some people and firms lock in profits before another run above this all-important psychological level.”