Bitcoin’s market value has surpassed $1 trillion, a milestone that puts the cryptocurrency in a very exclusive club with tech titans like Microsoft, Apple and Google’s parent company, Alphabet.
Bitcoin reached this record high Friday when it traded at roughly $54,000 per coin. It closed the day at more than $55,700 — quadrupling since early November.
Larger investors are taking the digital currency more seriously now, which has helped drive up its price.
“Over the past several months, we’ve seen hedge fund managers like Paul Tudor Jones, insurance companies like MassMutual and corporations like MicroStrategy, Square and Tesla all adding exposure to Bitcoin,” said Stephen McKeon, an associate professor of finance at the University of Oregon.
Electric vehicle maker Tesla, for example, recently purchased $1.5 billion of the cryptocurrency. (CEO Elon Musk himself has been endorsing other forms of digital currency, like Dogecoin.)
So how significant is this achievement?
“The real answer is, it’s purely symbolic,” explained David Yermack, professor of finance and business at the New York University Stern School of Business. “But inevitably, it will generate media coverage and the type of buzz that may draw more people into it and create a certain momentum effect, just because of pure psychology.” (Guilty.)
Market valuations can be overly simplistic. Yermack explained that they’re determined by multiplying the number