SOPA Images/Getty Images
- Bitcoin’s price rose to an all-time high of just above $52,600 on Wednesday afternoon.
- Interest from big firms like Tesla, BNY Mellon, and Mastercard has powered the latest rally.
- But bitcoin still divides opinion sharply, with economist Nouriel Roubini calling it a ‘bubble.’
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
The price of bitcoin held above $51,000 on Thursday morning after touching a record high of over $52,600 on Wednesday.
Bitcoin’s meteoric rise from under $4,000 as recently as March 2020 means the world’s biggest cryptocurrency is a whisker away from a market capitalization of $1 trillion.
The bitcoin price (BTC) had fallen marginally to $51,527 on the Coinbase exchange over the 24 hours to 7.20am ET on Thursday. That took year-to-date gains to around 75%.
Analysts say the huge amounts of cash that governments and central banks have pumped into economies during the coronavirus crisis has been a key factor in the rally.
Bitcoin advocates also say the cryptocurrency can act as a store of value if the record amounts of stimulus drive up inflation and erode the purchasing power of fiat currencies like the dollar.
Yet the latest jump in the bitcoin price was triggered by Elon Musk's Tesla, which revealed earlier this month that it bought $1.5 billion of the token in January. BlackRock, BNY Mellon, and Mastercard have also warmed to cryptocurrencies.
Nicholas Pelecanos, head of trading at blockchain company NEM, said: "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.
"This is just the start of a trend which could see billions of dollars flow into the crypto space over the course of 2021."
Bitcoin's rise to around $52,000 has taken the cryptocurrency's overall market value to above $950 billion.
Richard Byworth, chief executive of crypto exchange group Diginex, said: "As Bitcoin crossed the $50,000 mark, many investors have their eyes set firmly on the next big milestone - a trillion-dollar market cap." He said this would come if bitcoin reached around $54,000.
Bitcoin has strongly divided the financial world, however, with many analysts and investors seeing the digital currency as worthless and bound to crash again as it has in the past.
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."