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This week in Bitcoin price: Feb 17-22

Published on February 22, 2021

The big picture

In a big week, Bitcoin’s market cap crossed the $1 trillion mark for the first time. We also saw another new all-time high (prices topped out above $58,000 on February 21st) and the return of volatility late in the week. So what just happened?

First, the good news: North America finally got a Bitcoin exchange-traded fund (or ETF), if only in Canada. (The launch, traders hope, will make SEC approval for similar funds in the U.S. more likely.) News around major institutions adopting continued to break, with JP Morgan issuing a report that concluded, “Bitcoin is here to stay.” 

On the less enthusiastic end of the spectrum? Two statements from February 22. Treasury Secretary Janet Yellen issued a warning claiming Bitcoin is an “extremely inefficient” way of conducting transactions. And earlier in the day Tesla founder and CEO Elon Musk tweeted that prices “seem high.” (The current rally was sparked in part by Tesla’s recent $1.5 billion Bitcoin investment.)

Bitcoin is often compared to gold, as Bloomberg noted today its liquidity remains much more limited. In practice, limited volume means that Bitcoin can experience erratic price movements in response to signals that are widely considered positive (Tesla’s investment) or less so (Musk’s tweet, after which prices briefly declined by 10 percent).

Key points

  • Historic firms including Morgan Stanley and Bank of New York Mellon Corp (the nation’s oldest) revealed new Bitcoin plans — signalling, in the Wall Street Journal’s words, a “broader acceptance of the once-fringe digital currency” among traditional financial giants.

  • Canada's new Purpose Bitcoin ETF, the first North American Bitcoin ETF, came out of the gate with $400 million worth of volume in its first two trading days. Via ETFs, investors can gain exposure to assets like gold or BTC without having to hold it themselves. “If and when a Bitcoin ETF finally arrives in the U.S., growth could be explosive,” Bloomberg reports. 

  • In a note to clients, JP Morgan pointed at Bitcoin’s popularity with millennial investors and concluded that the cryptocurrency is “here to stay.”

  • DoubleLine Capital LP chief Jeffrey Gundlach, a long-time gold bull, now considers Bitcoin a better trade — despite gold’s reputation as a safe harbor during times of rising inflation. So far this year, the price of gold has trended down as Bitcoin’s price has surged. “Bitcoin may be the Stimulus Asset,” Gundlach concluded. “Doesn’t look like gold is.”

Spotlight: Elon Musk on Tesla’s Bitcoin strategy

Tesla added $1.5 billion in Bitcoin to its corporate treasury on February 8, and over the last several days CEO Elon Musk began explaining the company’s Bitcoin strategy via a series of tweets. In his typically un-corporate style, Musk noted the move made sense at a time when interest rates are vanishingly low. “Having some Bitcoin, which is simply a less dumb form of liquidity than cash, is adventurous enough for an S&P 500 company,” he said. “However, when fiat currency has negative real interest, only a fool wouldn’t look elsewhere.”

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