The total cryptocurrency market capitalization has hit a record-breaking $1 trillion for the first time since its inception.
The journey to this benchmark was led mostly by the market’s top cryptocurrency, Bitcoin (BTC), as institutional and retail investors continue to flock in droves.
Interest in from governments was also a factor in reaching this milestone as central banks across the world started to seriously explore using blockchain technology for digital versions of their nations’ currencies.
The cryptocurrency industry is establishing itself as a viable alternative investment by providing a technical framework for the future of money. This is happening at a time when many traditional assets and strategies are still suffering from the effects of the COVID-19 pandemic.
Institutions have been purchasing cryptocurrency, specifically Bitcoin, with record force throughout the entire year. In December, for example, business analytics firm MicroStrategy revealed that over the course of last year, it had built up a position in Bitcoin worth over $425 million. It then announced it had successfully sought $650 million in extra funding to bring its position to over $1 billion.
Grayscale Investments, a firm that manages cryptocurrency investment funds, saw its flagship fund, Grayscale Bitcoin Trust, grow to over $10.8 billion in assets under management. Most of this amount was added last year, it says, amid significant interest from its institutional clients.
Governments around the world have followed this trend, exploring how blockchain technology and cryptocurrencies can be used to create a futuristic monetary system. The People’s Bank of China’s ‘digital yuan’ and the European Central Bank’s ‘digital euro’ are perfect examples of this high-level interest, with the digital yuan already being successfully piloted.
Governments from the United States to Russia are exploring their own digital currencies, as well as pushing for cryptocurrency regulations such as the STABLE Act.
When both institutions and governments are both investing in and exploring the cryptocurrency sector, there’s no wonder why the general public is, once again, jumping on board.