$1 BILLION MARKET CAP
Overnight, the Bitcoin price shot up another six dollars, breaking through one of the largest milestones that the currency had yet to reach: a total market capitalization of one billion dollars. The price first reached the barrier at 05:15 GMT, surging past the critical price level of $91.251 with 10,958,700 bitcoins in circulation. The jump followed one and a half weeks of rapid growth that many believe was precipitated by an announcement on March 16 that a Eurozone bailout of Cyprus would be partially funded by a 6-10% levy on all Cypriots’ bank account savings. In other countries troubled by the Euro financial crisis such as Spain, many quickly became concerned that their own savings will be next – a worry that the Spanish government has only heightened, and as a result Spanish interest in Bitcoin is going through the roof. Another reason why the Bitcoin price may have shot up is a recent guidance report released by FINCEN, in which the US regulatory agency wrote that mere users of Bitcoin are not subject to federal money transmission regulation, although exchanges are – a strong step toward resolving legal worries that have acted as a chilling effect on business adoption for the past two years.
Psychologically, the milestone is a hugely important one. If the day that Bitcoin broke past $31.91 can be seen as the day that Bitcoin proved to the world that it did not die in 2011 and is only getting stronger, today is the day that Bitcoin officially joined the big leagues. Joining the so-called billion dollar club places Bitcoin above over 2000 out of 2677 companies trading on the NASDAQ, all but a few dozen non-publicly traded startups in the US, and even the GDP of twenty countries. As far as currencies go, for nearly two months Bitcoin has exceeded the M0 money supply of Bahrain of only $159 million, making claims that all national currencies are somehow legitimate while Bitcoin is not rather specious. Regardless of any comparisons, one billion is the point at which, according to some definitions, a company moves from being considered “small cap” to “mid-cap”, and one billion the mark at which many institutional investors start to see a particular market or investment as something to be taken seriously.
This fundamental shift is happening in more places than just the market charts. In February, Coinlab announced a deal with leading Bitcoin exchange MtGox in which Coinlab would take over MtGox’s US and Canadian customers, and Teri Buhl writes: “there is a hint in their new deal that shows they are working to find a way to get liquidity to Forex broker dealers or private wealth managers to help high net-worth individuals invest long-term in bitcoins.” In March, the Malta-based Exante announced a Bitcoin hedge fund targeted to institutional investors primarily in the EU. Finally, two weeks ago Tradehill, a Bitcoin exchange that operated between June 2011 and February 2012, came back from the shadows to offer a new product: Prime, a Bitcoin exchange specifically suited to high net worth, accredited investors. The exchange already has 75 accredited investors signed up, adding more every day. Tradehill’s Jered Kenna, who has spent the past year cultivating relationships with such individuals to make Prime a reality, said: “Bitcoin has really grown in the past year and a half. There is a lot more institutional money coming in, as well as regulatory attention. In the next year or so, I think you’re going to see a lot of conventional mainstream businesses adopting Bitcoin. You’re going to see a lot more venture capitalists moving in, and a lot of startups. You’re also going see a lot more people endorsing Bitcoin, with many public faces.”