In brief

  • Global market cap reaches new highs.
  • Bitcoin market cap closes in on $1 trillion.
  • Stock markets are up but investors warn not all investments are created equally.

It was another red letter day for crypto watchers as the industry continued its surge. Global market capitalization reached $1.68 trillion over night before settling around the $1.6 trillion mark.

Big money. Big crypto. IMAGE Nomics

The growth has come thanks to Bitcoin’s sustained run above $51,000 driven by a litany of new investors entering the space. 

Chief among them yesterday were Motley Fool, the hugely popular investing site, and BlackRock the world’s largest asset manager. The Fool announced it had invested $5 million with a view the asset will “10x” in value over the long term. 

BlackRock meanwhile, which manages $8.67 trillion worth of assets - more than the GDPs of the UK, India and Canada combined - has formerly thrown its hat in Bitcoin’s ring. 

The announcement made by Rick Rieder, BlackRocks CIO on CNBC yesterday led to a surge in Bitcoin’s price above $52,000. 

The world’s biggest cryptocurrency is now within touching distance of being worth $1 trillion. At the time of writing it’s sat around $965 billion. The stellar growth appears to have come at the expense of gold. 

The gold-bitcoin ratio is at an all time low, meaning gold’s price relative to BTC is at the lowest since the project began. Gold prices have been dropping since July 2020, whereas Bitcoin’s has been growing. Are the two related? 

According to an analysis on the precious metals market by JPMorgan Chase, 93 tons of precious metals have been dumped by bullion-backed funds, worth some $5 billion since November 6. 

Gold and Bitcoin used to be seen as bedfellows - save havens to weather economic storms. Today they look more like rivals, as investors with an increasing appetite for risk bet on Bitcoin’s performance to see them through tough times instead of gold’s slow and steady stance. 

Dow hits another record close as analysts warn "people are going to get burnt" 

The Dow reached yet another closing high yesterday as companies more intimately tied to the rebound in the US economy continue to see a return of revenue. Key among them were energy companies, who are seeing increases in demand - especially after the snow storm that struck Texas - and consumer discretionary companies.

Retail sales ticked up by 5.3% in the US, helping add weight to the theory that economies across the world have billions in unspent money waiting to be unleashed by consumers.

But as more retail investors pour into the space, some are cautioning that not all money invested leads to returns. Indeed, the cannabis industry was down yesterday, with Sundial Growers - a r/WallStreetBets favourite is down more than 20% yesterday.

"Some people are going to get burned," Mark Lehmann CEO of JMP Securities told Yahoo! Finance in reference to the boom in SPAC stocks that have been fuelling the surge in electric car company valuations. SPAC or Special Purpose Acquisition Company is a company that raises capital from investors, before identifying a private company to merge with and take public.

In 2020, these companies raised more than $80 billion, in 2021, SPACs have already raised $26 billion. "I just caution the overall public that this GameStop fever unfortunately will probably bleed a little into the SPACs," Lehmann continued.

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