Bitcoin Tops $40,000 for First Time

Pushes cryptocurrency market value past $1 trillion

▪ The digital coin hit an all-time high of $40,188 at around 1:15 p.m. ET, just a few hours after blowing past the $39,000 level, according to data from Coin Metrics.

▪ Bitcoin was 13.1% higher from a day earlier. The cryptocurrency is up over 30% since the start of 2021 and in the past 12 months has surged 400%.

▪ Social Capital’s Chamath Palihapitiya thinks the digital currency has a long runway ahead even after its massive rally.  It’s probably going to $100,000, then $150,000, then $200,000,” Palihapitiya told CNBC’s “Halftime Report.” “In what period? I don’t know. [Maybe] five or 10 years, but it’s going there.”

▪ Bitcoin’s resurgence has been attributed to a number of factors including more buying from large institutional investors. High-profile investors like Paul Tudor Jones, for example, have been buying the digital currency.

▪ Many bitcoin bulls say the cryptocurrency is akin to “digital gold,” a potential safe haven asset and a hedge against inflation. In a recent research note, JPMorgan said bitcoin could hit $146,000 in the long term as it competes with gold as an “alternative” currency. The investment bank’s strategists noted that bitcoin would have to become substantially less volatile to reach this price, however. Bitcoin is known for wild price swings.

▪ The idea of bitcoin as a hedge against inflation has continued to gain steam as governments around the world embark on large-scale fiscal stimulus programs. Analysts argue this could cause a spike in inflation.

▪ Bitcoin’s rise has also been helped by moves in the space from big financial firms like PayPal and Fidelity. PayPal last year launched a feature that lets its users invest in cryptocurrencies, and is planning to offer crypto payments across its massive network of retailers later this year.

▪ Anthony Pompliano, co-founder of crypto hedge fund Morgan Creek Digital, said bitcoin has seen more adoption as a means of payment recently. The total transaction volume of bitcoin in 2020 was greater than that of Venmo, PayPal or Apple Pay, he claimed.

▪ But some bitcoin critics — such as David Rosenberg, economist and strategist at Rosenberg Research — have called bitcoin a bubble.  “The parabolic move in bitcoin in such a short time period, I would say for any security, is highly abnormal,” Rosenberg told CNBC earlier this month.

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