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Bitcoin is closing at a market value of $ 1 trillion, a boom that is helping cryptocurrency returns to move beyond the performance of more traditional assets such as stocks and gold.

The largest token is worth more than $ 415 billion in 2021, about $ 956 billion, data compiled by Bloomberg show. The Bloomberg Galaxy Crypto Index, which includes bitcoin and four other coins, has more than doubled.

Speculators, corporate treasurers and institutional investors are thought to incite the volatile ascent of bitcoins. Crypto believers are dueling with skepticism for the dominant narrative around the ascent: the former being adopted for its ability to hedge risk as an inflationary view of the asset, while the latter sense an uncertain frenetic monetary and fiscal Ride over the waves of encouragement.

FOMO fear of missing out may be in play, said Shane Oliver, head of investment strategy with AMP Capital Investors Ltd in Sydney, adding that “in times of easy money it is boosted and it is partially What is driving the current interest. “

Bitcoin traded at around $ 51,300 as of 1:30 p.m on Friday in Hong Kong after the quintet in the past year. Performance towers of crypto index on stocks, gold, commodities and bonds in 2021.

This month, Tesla Inc. revealed a $ 1.5 billion investment and Microstrategy Inc. raised the sale of convertible bonds to $ 900 million to buy even more of the tokens. That brought the coin closer to corporate America.

If the fundamentals of companies are going to be closely tied to movements in bitcoin as they suddenly become bookies on the side, we’re going to be in the bubble zone before, said Craig Erlam, senior market analyst at Ora Europe Ltd. That you know it.

Tesla’s chief executive Aon Musk posted some cryptic tweet on Friday that appeared in part to defend the company’s action, stating that bitcoin is “a less dumb form of liquidity than cash” while adding it The decision of the electric vehicle manufacturer “does not directly reflect my opinion.”

According to the February edition of the Bank of America’s Global Fund Manager Survey, the “long bitcoin” trade is seen among the most crowded in the world with technology exposure and dollar shorts.

Oliver of AMP said that if Bitcoin “goes out of favor — for example, due to government regulation or investors just moving on to the next new thing — it can quickly dip.”

By Alex Alena

Alex Alena has been the lead news writer at Cryptocurrency Updates. With a degree in communications, Matt has an uncanny ability to make the most complex subject matter easy to understand.