(Bloomberg) – Bitcoin is approaching a market value of $ 1 trillion, an increase that is helping cryptocurrency returns far outperform more traditional assets like stocks and gold.

The largest token grew in value from more than $ 415 billion to about $ 956 billion in 2021, data from Bloomberg shows. The Bloomberg Galaxy Crypto Index, which includes Bitcoin and four other coins, has more than doubled.

It is believed that speculators, corporate treasurers, and institutional investors fueled Bitcoin’s volatile rise. Crypto-believers duel skeptics over the dominant narrative surrounding Ascension: the former see an asset for its ability to hedge risks like inflation, while the latter feel a precarious mania based on waves of monetary and fiscal impulses.

FOMO – fear of missing out – could be at play, said Shane Oliver, director of investment strategy at AMP Capital Investors Ltd. in Sydney, adding, “In the easy money era, this is magnified and, in part, is what drives current interest. ”

Bitcoin was trading at around $ 51,300 in Hong Kong at 1:30 p.m. on Friday, after increasing fivefold over the past year. The performance of the crypto index will outperform stocks, gold, commodities and bonds in 2021.

That month, Tesla Inc. announced a $ 1.5 billion investment and MicroStrategy Inc. increased convertible bond sales to $ 900 million to buy even more of the token. That brought the coin closer to the American company.

“If company fundamentals become tightly linked to moves in Bitcoin because they suddenly became speculators, we will be in the bubble realm before you know it,” said Craig Erlam, senior market analyst at Oanda Europe Ltd.

Elon Musk, Tesla’s chief executive officer, posted a somewhat cryptic tweet on Friday that appeared in part in defense of the company’s action. Bitcoin is “just a less stupid form of liquidity than cash,” while the EV manufacturer’s decision is not “directly reflected” in my opinion. “

The story goes on

Read More: Musk Defends Tesla Bitcoin Move, Says Token Less Stupid Than Cash

According to the February edition of the Bank of America’s global fund manager survey, the “long Bitcoin” trade is one of the busiest in the world, alongside technology exposure and dollar shorts.

AMP’s Oliver said that if Bitcoin “falls out of favor – for example due to government regulations or because investors are just moving on to the next new topic – it could collapse quickly.”

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