Bitcoin market value reaches $1 trillion

Bitcoin’s market value reached $1 trillion for the first time, a surge that’s helping cryptocurrency returns far outstrip the performance of more traditional assets such as stocks and gold.

The largest digital asset has added more than $450 billion of value in 2021 to go to more than $1 trillion, data compiled by Bloomberg shows. 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 have stoked Bitcoin’s volatile ascent. 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.

At the same time, the argument has been made that assigning a market capitalization isn’t an accurate representation because Bitcoin isn’t a company or even an asset. Skeptics say that without real world assets that companies possess or government backing such as the dollar, all investors are really buying into is faith in the cryptocurrency’s network.

Still, FOMO — fear of missing out — may be at play, said Shane Oliver, head of investment strategy with AMP Capital Investors Ltd. in Sydney, adding that “in times of easy money, this gets magnified, and it’s partly what’s driving the current interest.”