12 years in the making, and it’s finally here.
Bitcoin, the largest cryptocurrency in the world and the first of its kind, has reached a historic milestone as its market cap tears through a new magic number: $1 trillion.
Bitcoin at $1 trillion
Less than a year ago, it was nearly impossible that bitcoin would get to this point as its price tanked below $5,000 thanks to the pandemic and its effects on the global economy and financial markets.
Despite the pandemic-induced deep, there was a silver lining in the form of halving, an event in which the block reward for miners was slashed in half. This happens once every four years.
What it simply means is that the number of bitcoins minted per day is reduced by 50%.
The decrease in supply would trigger a price increase. And historically, bitcoin halving has usually been followed by a bull cycle.
Bitcoin is in the midst of a bull run. And today, after surpassing a price of $54,000, bitcoin became a trillion-dollar market cap asset.
However, it was not just the effects of the halving that got bitcoin to this point.
Institutional capital and the road to $1 trillion
Bitcoin has seen several bull cycles in its short history but they all had one thing in common: they quickly ran out of steam.
The current bull run, which picked a lot of steam last December, has largely been fueled by the flow of institutional capital.
In November, bitcoin was trading at $18,000+ and by the end of the year, it was just under $30K.
The entry of major companies in the sector played a huge role as it gave bitcoin the legitimacy and endorsement it needed.
Tesla’s purchase of bitcoins worth $1.5 billion was a big factor as it pumped the asset price 14% within a few hours, and later on, prices just went up.
Wall Street powerhouses such as JPMorgan have turned to bitcoin.
The entire sector reached a market cap of $1 trillion in early January and since then, the prices have been going up with only a few dips here and there.
At one point, bitcoin dropped from over $40K to around $30,000, sparking fears that it could go down further.
Institutional players that formerly shunned bitcoin and watched with caution from the sidelines are leading bitcoin’s latest rally.
Where bitcoin’s price is headed is anyone’s guess. The excitement and momentum around the digital asset continue to grow.