Bitcoin’s rollercoaster ride continues, as the world’s biggest digital currency surpassed the $50,000 mark.
It’s always difficult to tell what moves bitcoin, but on Monday, Bank of America gave cryptocurrencies their seal of approval as an asset class.
“With a $2 trillion market value and 200 million users, the digital asset universe is too large to ignore,” Bank of America analysts said.
“We believe crypto-based digital assets could form an entirely new asset class. Bitcoin is important with a market value of about $900 billion, but the digital asset ecosystem is so much more. … Bitcoin was designed as money, but is increasingly viewed as digital gold.”
Bitcoin recently traded at $49,756, up 2.45%. It hit a peak of $50,325 Tuesday, a four-week high. In an indication of its volatility, Bitcoin has skyrocketed 368% in the last year, but has slid 16% in the last six months.
The bitcoin debate continues to rage among bulls and bears.
Bulls say bitcoin’s use as a medium of exchange in normal commercial transactions will grow.
Bears point out that few consumers and companies will want to use such an unstable currency.
Bitcoin bulls say the digital asset is a hedge against inflation and a store of value. Bears note that the only thing bitcoin has proved to be so far is a vehicle for speculation.
The bulls also maintain that the currency can protect investors against declines in other markets, like stocks. But the bears note that since bitcoin was created in 2009, no sustained drop in stocks has occurred to test that theory.