After hitting $50,000 at the beginning of the week, Bitcoin is holding around those levels. Its market capitalization is up to $923 billion. The largest cryptocurrency is on the path to hit the trillion-dollar crypto asset class.
With the US dollar ending its winning streak on Thursday as quick economic recovery hopes dampen due to the Pandemic, BTC pulled from its record high of $52,640. The cryptocurrency has surged significantly over the past year, and this year it is up 70%. The surge is driven by growing interest from institutional investors, with some analysts warning that this surge might not be unsustainable.
Institutional investment in BTC growing
Interestingly, there has been a significant BTC interest from self-managed super funds as programmatic retirees turn to BTC as a hedge against inflation as interest rates continue to remain at zero globally. In the past, SMSFs’ trade sizes were around tens of thousands of dollars, but now they have increased to hundreds of thousands of dollars.
Most of the SMSF holders view BTC as a store of value, which is interesting. Several people are learnings and researching more about cryptocurrency, which they consider a deflationary asset. The allure of BTC is pegged on the fact that the coins are limited at 21 million, which makes a better hedge against inflation because no more coins can be issued relative to fiat currency.
Bitcoin could surge to $240, says, analyst
The recent surge in BTC price has led analysts such as Peter Brandt to indicate that the digital currency entered the third parabolic advance in the past decade. Parabolic advances usually lead to bull rallies, and currently, BTC is in the early stage of the third parabolic advance, which could push the price up to $240,000.
Fortunately, Brandt is not the only analyst with the view that BTC price could rise to exceptional levels. Stock-to-flow (S2F) model PlanB author and BTC evangelists have also predicted a price target of $228. This could be possible considering the increasing institutional ownership that we are currently witnessing. Also, big companies started including BTC in their balance sheet following Tesla’s purchase.
Tesla profits off $1.5 BTC investment, but the deal is questionable
Speaking of Tesla, the EV manufacturer purchased $1.5 billion worth of BTC at the beginning of January. This move sent BTC higher and already has turned impressive profits for the company. In January, BTC was trading between $29,333 and $37,020, which means $1.5 billion got between 37,020 and 51,137 BTC. Based on this, the bitcoins could be worth $1.79 billion on the lower side or $2.48 billion on the higher side, which means a profit of $0.29 billion or $0.98 billion.
However, Tesla’s BTC purchase is under scrutiny because of a conflict of interest. A board member who approved the purchase is also a crypto investor who sits on the board of two major cryptocurrency companies.