The cryptocurrency rally has been consistent since late last year, increasing the price of different coins and the overall market value. Market capitalization hit an all-time peak of $2 trillion on Monday, according to data from market trackers CoinGecko and Blockfolio, following the surge in investment from both institutional and retail investors.
The crypto market cap hit $2.02 trillion by mid-afternoon to reach a new record, led by bitcoin, which hit its own milestone by holding the $1 trillion market cap for one whole week, surpassing most Silicon Valley big names.
The new cap. has also been attributed to the recent decrease in bitcoin volatility.
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JP Morgan says that bitcoin’s volatility has decreased in recent weeks, making the cryptocurrency more appealing to institutional investors seeking low-correlation assets to diversify their investment portfolios.
The investment bank has also revised its bitcoin price target to $130,000.
“The recent change in the correlation structure of bitcoin relative to traditional asset classes will likely increase the institutional adoption of bitcoin,” JPMorgan explained. Based on the current gold price of $1,700 per troy ounce, the bank says, “Mechanically, the bitcoin price would have to rise [to] $130,000, to match the total private sector investment in gold.”
The bank says if bitcoin’s volatility continues to converge with gold’s volatility, its long-term price target would be $130,000.
In just over two months, the market capitalization of the cryptocurrency market has doubled. But the latest boost in the cryptocurrency market appears to have been driven by ether, the digital coin that powers the Ethereum blockchain.
Bitcoin was last up 1.4% at $59,045. Since hitting a lifetime peak of more than $61,000 in mid-March, bitcoin has since traded in a relatively narrow range.
Analysts said as long as bitcoin stays above $53,000, it will be able to maintain its $1 trillion market cap.
Ethereum, the second largest cryptocurrency in terms of market cap, was up 1.3% at $2,103. Its market cap was $244 billion on Monday, while hitting a record high of $2,144.99 last Friday.
“Momentum and interest have begun to expand beyond bitcoin and ethereum,” said Paolo Ardoino, chief technology officer, at crypto exchange Bitfinex.
“As the industry continues to mature, we expect more blockchain-based applications to be introduced to the world, and coinciding with that, a surge of interest around other alternative assets…as they become more market-ready,” he added.
Blockchain data provider Glassnode, in a research report, said the fact that bitcoin has held the $1 trillion market cap for one week is a “strong vote of confidence for bitcoin and the cryptocurrency asset class as a whole.”
It added that on-chain activity continues to reinforce bitcoin’s robust position, with a volume equivalent to over 10% of circulating supply transacting above the $1 trillion threshold.
Bitcoin has risen more than 100% this year, while ethereum has gained nearly 190%. Both have massively outperformed traditional asset classes, bolstered by the entry of mainstream companies and large investors into the cryptocurrency world, including Tesla Inc and BNY Mellon.
The declining volatility is attracting major investment banks that are now exploring ways to allow clients to get involved with digital asset investments.
In March, CNBC reported that Morgan Stanley became the first major U.S. bank to offer its wealth management clients access to bitcoin funds. Last month, Goldman Sachs also introduced a bitcoin desk, gearing up to launch its first investment vehicles for bitcoin and other digital assets to clients of its private wealth management group.