A bitcoin token.
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- Bitcoin price hit a high above $ 51,700 on Wednesday after breaking $ 50,000 on Tuesday.
- However, JPMorgan said the rally would not be sustainable if Bitcoin’s volatility does not decrease.
- Bitcoin’s market cap has risen to nearly $ 1 trillion.
- You can find more stories in the Insider business section.
Bitcoin price hit a record high above $ 51,700 on Wednesday after rising above $ 50,000 for the first time on Tuesday. The surge brought the market capitalization of the largest cryptocurrency to nearly $ 1 trillion.
The price is up about 78% in 2021 and is continuing an amazing rally after falling below $ 4,000 in March last year. Market capitalization has increased more than $ 700 billion since the end of September.
Bitcoin rose 4.6% to $ 50,817.80 as of 9:40 a.m. ET, after previously hitting an intraday record of $ 51,719.11.
Analysts have said record amounts of monetary and fiscal stimulus are boosting price by flooding markets with cash and creating fears of inflation and currency devaluation.
Tesla’s announcement in early February that it snapped up $ 1.5 billion worth of Bitcoin pushed the final leg of the rally forward. Interest from big Wall Street names like BlackRock, BNY Mellon, and Mastercard has also legitimized cryptocurrencies.
However, JPMorgan analysts said Tuesday that high volatility continues to be a problem for the digital asset.
They said bitcoin is far more volatile than gold, which many crypto enthusiasts are hoping that bitcoin can be used as a store of value in investors’ portfolios. A metric known as three-month realized volatility was 87% for Bitcoin, compared to 16% for gold.
“In our opinion, the current price doesn’t look sustainable unless the Bitcoin volatility subsides quickly from here,” the analysts said.
JPMorgan also said its analysis found that Bitcoin’s rapid surge over the past five months “has occurred with relatively low institutional flows.”
“Without a renewed acceleration of the retail flow, some recovery in real money flows would likely be necessary to maintain current prices,” the press release said.
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