Bitcoin Price Sets New Record At $50,000: Can It Ever Replace The US Dollar?

Bitcoin has set a new all-time high at $50,000. While many have been championing it as a store of value similar to gold, others are skeptical whether it will ever replace the U.S. dollar.

Bitcoin closed at $49,158 Tuesday but went on to break past $50,000 the next day. It is now up 1,215% since dropping to $3,800 in March 2020. The dominant cryptocurrency is also up 76% since the year began.

The price of the world's first cryptocurrency was boosted by increasing adoption by institutional investors and corporations. In May last year, legendary investor Paul Tudor Jones said he put 1% of his fund in Bitcoin, calling it "the faster horse" that he would bet on because it reminded him of gold in the 70s. Around the same time, the cryptocurrency also underwent a technical event called "halving," which decreases the amount of Bitcoin issuance to miners per day.

With this decrease in supply came the inflow of more institutions, including MassMutual and Guggenheim Investments. PayPal started allowing customers to purchase cryptocurrencies while companies like MicroStrategy added Bitcoin into their treasure reserves. Earlier this month, Tesla, whose CEO Elon Musk previously said he was "supportive" of Bitcoin, disclosed that the company bought $1.5 billion worth of Bitcoins.

MicroStrategy CEO Michael Saylor said the trend of more institutions investing in Bitcoin would continue in Bitcoin. "There're enthusiasts for bitcoin as a medium of exchange, but I personally believe that the compelling use case is a store of value," Saylor told CNBC.

James Bullard, president of St. Louis Federal Reserve, does not think Bitcoin can replace the U.S. Dollar as a global currency. "I just think for Fed policy, it's going to be a dollar economy as far as the eye can see — a dollar global economy really as far as the eye can see," Bullard told CNBC in a separate interview, noting that Bitcoin does not pose a threat to the greenback.