The price of bitcoin has surpassed $50,000 for the first time. The cryptocurrency made a new all-time high of $50,487 on Tuesday. It has rallied by 68% since 1 January and has soared tenfold since March last year. Previous bitcoin rallies quickly fell apart as speculative fever ebbed, but investors argue that this one rests on more solid fundamentals, says Ryan Browne for CNBC.
Institutional adoption is making bitcoin a more mainstream asset, with the recent jump triggered in part by Elon Musk’s announcement that Tesla has bought $1.5bn-worth of the digital currency. Mastercard, PayPal and investment bank BNY Mellon are among other big names to have got behind the digital currency of late.
Blue-chip bitcoin?
If other companies follow Tesla’s lead, then the opportunity for bitcoin is vast, says Tyler Durden on zerohedge.com. Institutional investors already own about $22bn-worth of bitcoin, equivalent to 3% of circulating supply, according to data from Cointelegraph. If the world’s corporations put just 3% of their estimated $10trn global cash pile into bitcoin the currency “could more than double” from here.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Musk is hardly a typical leader, says James Dean in The Times. Most big firms are not run by iconoclastic, all-powerful “founder-chief executives”. This “is billionaire eccentricity, not a fundamental shift in corporate cash management”.
“What goes up can just as easily come crashing down,” says Willem Buiter on Project Syndicate. Bitcoin’s “spectacular price volatility” is characteristic of “an asset without intrinsic value whose market value can be anything or nothing”. Bitcoin only suits those “with healthy risk appetites and a robust capacity to absorb losses”.
Bitcoin’s fans love the fact that it is decentralised and supply is limited: only 21 million bitcoins will ever be created. That is attractive in “an era of extraordinarily loose monetary policy”, says Eoin Treacy of fullertreacymoney.com. Yet in other ways it remains painfully limited. Transaction speeds are so slow that it is impractical as a way of making payments. One day engineers may solve the scalability problem and create “a much better product”. But “right now it is what we have”.
No one knows which digital currency will ultimately be king, agrees Rana Foroohar in the Financial Times. It could be bitcoin, a competitor such as ethereum or “some yet-to-be-invented” cryptocurrency. Perhaps the best way to look at bitcoin is not as an investment opportunity but, as analyst Luke Gromen puts it, the “last functioning fire alarm” in a market where prices are hopelessly distorted by quantitative easing. As global confidence in the United States dollar ebbs, the frenzy in bitcoin is a “canary in the coal mine” warning us of “some very big geopolitical changes ahead”.
-
London claims victory in the Brexit warsOpinion JPMorgan Chase's decision to build a new headquarters in London is a huge vote of confidence and a sign that the City will remain Europe's key financial hub
-
Rachel Reeves's Autumn Budget: What it means for the UKOpinion A directionless and floundering government has ducked the hard choices at the Autumn Budget, says Simon Wilson
-
London claims victory in the Brexit wars
Opinion JPMorgan Chase's decision to build a new headquarters in London is a huge vote of confidence and a sign that the City will remain Europe's key financial hub
-
The consequences of the Autumn Budget – and what it means for the UK economy
Opinion A directionless and floundering government has ducked the hard choices at the Autumn Budget, says Simon Wilson
-
Reinventing the high street – how to invest in the retailers driving the changeThe high street brands that can make shopping and leisure an enjoyable experience will thrive, says Maryam Cockar
-
8 of the best houses for sale with electric vehicle chargingThe best houses for sale with electric vehicle charging – from a converted World War II control tower in Scotland, to a Victorian country house in Cumbria
-
Big Short investor Michael Burry closes hedge fund Scion CapitalProfile Michael Burry rightly bet against the US mortgage market before the 2008 crisis. Now he is worried about the AI boom
-
The global defence boom has moved beyond Europe – here’s how to profitOpinion Tom Bailey, head of research for the Future of Defence Indo-Pac ex-China UCITS ETF, picks three defence stocks where he'd put his money
-
Profit from a return to the office with WorkspaceWorkspace is an unloved play on the real estate investment trust sector as demand for flexible office space rises
-
New frontiers: the future of cybersecurity and how to investMatthew Partridge reviews the key trends in the cybersecurity sector and how to profit
