Bitcoin, ether hit fresh highs

Bitcoin hit a fresh high on Saturday, extending a two-month rally that took its market capitalization above $1 trillion on Friday.

The world’s most popular cryptocurrency rose to a record $57,553, taking its weekly gain to around 20%. It has surged nearly 100% this year.

Bitcoin’s gains have been fueled by evidence it is gaining acceptance among mainstream investors and companies, such as Tesla Inc, Mastercard Inc and BNY Mellon.

Ether, the second-largest cryptocurrency by market capitalization and daily volume, on Saturday hit a record $2,040.62, for a weekly gain of about 12%.

Ether is the digital currency or token that facilitates transactions on the ethereum blockchain. In the crypto world, the terms ether and ethereum have become interchangeable.

Ether futures contracts launched on derivatives exchange CME earlier this month.

The largest digital-asset has added more than $450 billion of value in 2021 to more than $1 trillion, data compiled by Bloomberg show. The Bloomberg Galaxy Crypto Index, which includes Bitcoin and four other coins, has more than doubled.

Speculators, corporate treasurers and institutional investors are thought to have stoked Bitcoin’s volatile ascent. Crypto believers are dueling with skeptics for the dominant narrative around the climb: the former see an asset being embraced for its ability to hedge risks such as inflation, while the latter sense a precarious mania riding atop waves of monetary and fiscal stimulus.

At the same time, the argument has been made that assigning a market capitalization isn’t an accurate representation since Bitcoin isn’t a company or even an asset. Skeptics say without real-world assets that companies possess or government backing like the dollar, all investors are really buying into is faith in the cryptocurrency’s network.

Still, FOMO — fear of missing out — may be at play, said Shane Oliver, head of investment strategy with AMP Capital Investors Ltd. in Sydney, adding that “in times of easy money this gets magnified and it’s partly what’s driving the current interest.”

The crypto index’s performance towers over stocks, gold, commodities and bonds in 2021.

This month, Tesla Inc. disclosed a $1.5 billion investment and MicroStrategy Inc. boosted a sale of convertible bonds to $900 million to buy even more of the token. That brought the coin closer to corporate America.

“If companies’ fundamentals are going to become closely tied to movements in Bitcoin because they’ve suddenly become speculators on the side, we’re going to be in bubble territory before you know it,” said Craig Erlam, senior market analyst with Oanda Europe Ltd.

Elon Musk, the billionaire chief executive of Tesla, said on Saturday the price of bitcoin and ethereum seemed high.

The U.S. recovery is accelerating, putting it on course to outperform China’s V-shaped rebound, according to JPMorgan Chase & Co. economists.

Indications of resilience in global industry, a surge in American retail spending, along with fiscal stimulus around the world, especially from the Biden administration, point to higher growth in the U.S., according to projections from JPMorgan economists led by Bruce Kasman.

“We now expect the U.S. to outpace China, moving on a path that raises GDP well above its pre-crisis trajectory,” the economists wrote in a note. “We expect a regional gap between the U.S. and China and the performance of the rest of EM to remain large for some time to come.”

The alignment of U.S. fiscal stimulus and rebound from Covid-19 in Europe will help bring a 7.6% surge in world GDP around mid-year, they said. While the U.S. picture looks particularly promising, recent high-frequency data in China indicates less slowing there than had been feared, they added.

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