LONDON: Bitcoin hit yet another record high on Friday, and moved within sight of a market capitalisation of US$1 trillion, blithely shrugging off analyst warnings that it is an “economic side show” and a poor hedge against a fall in stock prices.
Its latest gains took its market capitalisation – 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. “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.
On Thursday, Tesla boss Elon Musk – whose tweets have fuelled bitcoin’s rally – said owning the digital coin was only a little better than holding cash. He also defended Tesla’s recent purchase of US$1.5 billion of bitcoin, which ignited mainstream interest in the digital currency.