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.
Subscribe to 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”.
-
8 of the best houses for sale with annexesThe best houses with annexes – from a period property in the Lake District to a 13th-century house with a two-bedroom annexe in Saltwood, Kent
-
Zelenskyy moves to appease Donald Trump – what happens now?Ukraine’s president Volodymyr Zelenskyy is conceding ground to secure the least-worst deal possible, says Emily Hohler
-
Rolls-Royce stock jumps 15% – could it climb further?Aircraft-engine group Rolls-Royce’s CEO has been hailed as a hero for spearheading the firm’s recovery. And the future looks bright, says Matthew Partridge
-
The power of private marketsInterview Helen Steers, co-manager of the Pantheon International investment trust, tells MoneyWeek about the vast array of compelling opportunities in private equity
-
Vertex Pharmaceuticals is an uncommon opportunity in rare diseasesVertex Pharmaceuticals operates in a profitable subsector and is poised for further success
-
Global investors have overlooked these top tips in emerging marketsOpinion Chris Tennant, co-portfolio manager of Fidelity Emerging Markets, picks three attractive companies in emerging markets
-
King Coal has not been dethroned yet — should you buy?The demand for coal is only growing, yet investors don’t seem to want to take advantage of the opportunity, says Rupert Hargreaves
-
It’s time to start buying Europe again, says Merryn Somerset WebbOpinion Europe's stocks are cheap and the economic backdrop is starting to look cheerier, says Merryn Somerset Webb
-
Prosus to buy Just Eat for €4.1 billion as takeaway boom fadesFood-delivery platform Just Eat has been gobbled up by a Dutch rival. Now there could be further consolidation in the sector
-
Should investors stay bullish and buy UK and US stocks?Opinion Ignore the Eeyores, says Max King. The outlook for stocks in both Britain and America remains auspicious
