By Barry Eitel
Bitcoin surged to a new all-time high above $6,000 on Friday, sending its total market capitalization above $100 billion for the first time ever.
The infamously volatile cryptocurrency was valued at roughly $6,021 per bitcoin at press time, according to bitcoin exchange CoinDesk. The price of bitcoin has soared nearly 25 percent since the same time last week.
On Wednesday, the value of bitcoin had fallen to around $5,175 after a Russian financial regulator said that digital currencies were “worse than casinos” during an address in Sochi.
Bitcoin was invented in 2009 by a software engineer, or group of engineers, going under the name Satoshi Nakamoto. No printed currency is involved; instead, a computer algorithm “mines” more bitcoin from existing bitcoin.
In September, bitcoin crossed the $5,000 threshold for the first time in its history, but its value had shifted significantly day-to-day over the past two months. The recent surge means that bitcoin’s value has increased six-fold since Jan. 1.
The boost in market capitalization means the value of all bitcoin is worth more than the gross domestic product of many nations.
“At almost $100 billion, bitcoin's market cap is now greater than 91 percent of the companies in the S&P 500,” financial analyst Charlie Bilello wrote on Twitter Friday.
There did not seem to be a single immediately obvious factor behind the sudden surge. Over the past few months, financial regulators in China, the United States and Russia have disparaged bitcoin for its volatility. The statements usually cause a steep downturn in bitcoin’s value but a rapid rebound always followed. Investors appear to believe that the reluctance of world governments in accepting bitcoin is temporary.
While the value of bitcoin is nominally linked to supply and demand, hype has always played an outsized role, especially recently. According to forums for bitcoin investors, many proponents of bitcoin now believe that a market cap of $1 trillion is possible.