THE total value of all bitcoin topped US$1 trillion Friday, capping a spectacular record-breaking week for the world’s most popular cryptocurrency, AFP reported.

Bitcoin broke another record Saturday after reaching more than the record US$1 trillion in market value for the first time a day earlier, leaving some of its biggest backers in a state of wonderment.

The largest cryptocurrency rose as much as 3.4 percent to a record high of US$57,527 on Saturday before paring gains to US$57,040 in New York. It’s surged 56 percent since the end of January and more than quadrupled last year. For several years after its debut more than a decade ago, Bitcoin traded for just a few cents.

According to Reuters, Bitcoin’s gains have been fueled by signs it is winning acceptance among mainstream investors and companies, from Tesla and Mastercard to BNY Mellon.

Its latest gains took its market capitalization — all the bitcoin in circulation — to about US$982 billion, according to cryptocurrency data website CoinMarketCap, with all digital coins combined worth around US$1.6 trillion.

Still, many analysts and investors remain skeptical of the patchily regulated and highly volatile digital asset, which is still little used for commerce.

In a tweet, Tesla founder Elon Musk said Bitcoin prices “seem high.” Musk earlier called Bitcoin a “less dumb” version of cash. He also defended Tesla’s recent purchase of US$1.5 billion of bitcoin, which ignited mainstream interest in the digital currency.

Crypto believers are dueling with skeptics for the dominant narrative around the climb: the former see an asset being embraced for its ability to hedge risks such as inflation, while the latter sense a precarious mania riding atop waves of monetary and fiscal stimulus.

Analysts at JP Morgan said bitcoin’s current prices were well above estimates of fair value. Mainstream adoption increases bitcoin’s correlation with cyclical assets, which rise and fall with economic changes, in turn reducing benefits of diversifying into crypto, the investment bank said in a memo.

“Crypto assets continue to rank as the poorest hedge for major drawdowns in equities, with questionable diversification benefits at prices so far above production costs, while correlations with cyclical assets are rising as crypto ownership is mainstreamed,” JP Morgan said.

Bitcoin is an “economic side show,” it added, calling innovation in financial technology and the growth of digital platforms into credit and payments “the real financial transformational story of the COVID-19 era.”

Other investors said bitcoin’s volatility presents a hurdle for its ambitions to become a widespread means of payment.

(SD-Agencies)