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The New Year’s Eve Champagne has been imbibed, but concerns about bubbles will persist well into 2021.

There wasn’t much to celebrate in 2020, a miserable year for the economy and humanity in general. At least there was the stock market. Despite the Covid-19 pandemic, which ground the U.S. economy to a halt, the Dow and the rest of the major indexes finished the year at or near record highs. As is so often the case when there is a wide chasm between stock market gains and economic pain, many investors start to wonder if we’ve witnessed a massive financial bubble.

There’s certainly evidence for such a view, if that’s your inclination. Like the cartoon Tasmanian devil—hungry all the time and leaving a path of destruction behind it—investors have chased the newest new thing ever higher. QuantumScape (ticker: QS), virtually unknown just a few months ago, has gained 745% since announcing it would go public via a special purpose acquisition company in September, if the SPAC’s gains are counted. Chinese electric-vehicle maker NIO (NIO) saw its share price increase more than tenfold in 2020. And then there were the hot new offerings Airbnb (ABNB) and DoorDash (DASH), which gained 116% and 40%, respectively, since going public in December, and made investors scream “Bubble!” like the dot-com era all over again.

“We aren’t in that euphoric-moment bubble territory just yet,” says Michael Arone, chief investment strategist for the US SPDR Business at State Street Global Advisors. “But there are certainly red flags to suggest we could be heading there.”

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The railroad titans built America, and they deserved every penny they got for it, according to Clarence W. Barron.

The founder and editor of this magazine forcefully countered those who thought that salaries of railroad presidents were too high and that something ought to be done about it. The railroad president, Barron wrote in 1923, “is the guiding force to whom keeping tens of thousands of spike drivers at work is only a detail. The transportation system of the country is the product of the brains and initiative of such as he.”

The early railroads were the internet of their day, connecting people and commerce, compressing time and space. Starting in the 19th century, they turned America’s disparate regions into a connected whole and, in the process, created vast fortunes. As a result, railroads were a central topic in early issues of Barron’s.

Railroads had been generating controversy since the days of Cornelius Vanderbilt, Edward Harriman, and J.P. Morgan. It was the first industry to draw government antitrust scrutiny, setting up the long struggle of free competition versus the public good. A recent House Judiciary Committee report on the market dominance of the FAANGs— Facebook (ticker: FB), Amazon.com (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet’s (GOOGL) Google—decried that these companies “have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.”

Love them or hate them, the railroads created a template that other nascent industries followed. Telegraph and telephone, automobile and airplane, radio and television, and now the internet—each of these technologies, in its own way, made us ever more tightly connected. Industries that sprang up around these new technological products generated enormous wealth and great power for some. And all of them eventually felt the hand of government regulation.

But first the railroad had to come through.

Railroads dominated the economy in the 19th century as no industry would again; they practically were the industrial economy for decades. Charles Dow’s first stock index, in 1884, contained nine railroads and just two industrial stocks. The FAANGs, which make up about 17% of the S&P 500 index, can’t compare with the sheer size and dominance of the 19th century railroads.

In its early years, Barron’s produced article after article on the Norfolk & Western, Northern Pacific, Missouri Kansas & Texas, Rock Island, Atchison Topeka & Santa Fe, and more. The magazine spoke of Morgan, Harriman, and their ilk, all by then dead, with reverence. At one point, Barron’s lamented that the current crop of American capitalists “seem puny figures beside the speculative kings of the last century.”

That group did transform the country. In 1805, it took the Lewis and Clark Expedition more than a year to travel from Illinois to the Pacific Ocean. In 1869, when the first transcontinental railroad linked up, the trip from New York to San Francisco was reduced to six days.

Tracks soon ran in every direction. Railroad towns like Cheyenne, Wyo.; North Platte, Neb.; and Billings, Mont., popped up along the tracks as hamlets like Omaha and Denver grew into cities.

Everywhere, forests and prairies were converted to farmland as Americans pulled up stakes and moved westward, and thousands of immigrants who laid the rails settled down and helped change what it meant to be an American.

“The railroad industry’s influence would penetrate every corner of American life,” writes Michael Hiltzik in Iron Empires: Robber Barons, Railroads, and the Making of America. The railroads would come to dominate business, politics, and home life, while creating the financial machine known as Wall Street, which was fueled by railroad bonds.

In 1893, Frederick Jackson Turner declared the end of the American frontier, and it was the railroad that finished it off. Steel rails crossed every frontier, with mileage growing by leaps and bounds—from 30,000 miles of tracks in 1860 to 163,500 miles in 1890.

By the time Turner declared the frontier dead, the golden age of railroads was drawing to a close. Route mileage peaked at 254,000 in 1916 and has been declining ever since.

The Dow Jones Railroad Average peaked in 1913 and wouldn’t regain that level again until 1926. Even so, Barron’s noted that the recovery was based not on growth but on “increased operating efficiency…consolidation and railroad labor peace.” In other words, the industry had matured.

By the 1930s, the automobile had cut into railroad dominance, though it was construction of the Interstate Highway System and growth of affordable air travel in the 1950s and ’60s that finally all but broke the industry. When a rash of railroads, led by Penn Central in 1970, declared bankruptcy, the government stepped in.

In 1971, America’s long-distance passenger lines were combined into federally funded Amtrak; a few years later, the government created Conrail by consolidating freight lines in the Northeast. By the late ’80s, Conrail’s operations had improved so much that it sold stock in an initial public offering. A decade later, CSX and Norfolk Southern acquired Conrail and split the assets. The railroads entered a competitive new phase.

Railroads were now vying on a level field with trucking and airfreight, all based on shipping containers that move seamlessly from ship to rail to truck to plane. More than ever, efficiency became the byword, led by E. Hunter Harrison.

Starting at Canadian National Railway (CN), Harrison cut operating costs with what he called “precision scheduled railroading.” Hub-and-spoke routes were replaced by straight runs. Scheduled departures reduced the time that trains sat idle. Locomotives pulled longer trains. As head count shrank and trains moved more tonnage with less fuel, CN’s operating costs fell from 75% of revenue to 61%. By the time Harrison stepped down as CN’s CEO in 2009, its stock had risen sixfold.

That year, Warren Buffett’s Berkshire Hathaway (BRK.B) purchased Burlington Northern Santa Fe—and Wall Street took notice of trains again.

Facebook, Apple, and the other FAANGs can only hope for a run like that. Not many industries get a second wind a century after their glory days.

There’s Reason to Be Hopeful About Intel Stock in 2021. Here’s Why.

Loeb, CEO of hedge fund Third Point, laid out the need for change at the once pioneering chip maker. And he encapsulated the question many on Wall Street and in Silicon Valley have been asking for more than a year now: How did once-dominant Intel (ticker: INTC) so clearly lose its way?

“We cannot fathom how the boards who presided over Intel’s decline could have permitted management to fritter away the company’s leading market position,” Loeb wrote to Intel Chairman Omar Ishrak. “Stakeholders will no longer tolerate such apparent abdications of duty.”

Intel shares rose 5% on news of Loeb’s letter and a Reuters report that Third Point had a $1 billion stake in the company. The stock was still down 17% in 2020, versus a 51% gain for the PHLX Semiconductor index.

For years, the investing case around Intel has been that its true value lies in a fully-integrated approach to chip making—it designs and manufactures chips, while rivals Advanced Micro Devices ( AMD ) and Nvidia (NVDA) rely on third-party manufacturers such as Taiwan Semiconductor Manufacturing (TSM) and Samsung Electronics (005930.Korea).

But that case assumed Intel could do design and manufacturing equally well. Several years of delays have undermined that claim.

“The loss of manufacturing leadership and other missteps have allowed several semiconductor competitors to leverage TSMC’s and Samsung’s process technology prowess and gain significant market share at Intel’s expense,” Loeb wrote.

As Barron’s observed in November, Intel’s troubles can be tied to a decision some 15 years ago, when it opted not to make processors for Apple’s (AAPL) iPhone. While the mobile market was small at the time, it has proven to be a massive volume play for Taiwan Semi and Samsung, giving them increased scale and practice at making advanced, energy-efficient chips.

A desire to boost energy efficiency is a major reason Apple decided to design its own Mac chips, which began rolling out to new models in November. These days, consumers are as focused on long battery life as they are on raw performance, and Intel hasn’t been able to keep up. Taiwan Semi is at least a year ahead of Intel on key chip-making technology.

Intel responded to Loeb’s letter with a statement saying that it welcomed input from investors on how to enhance shareholder value, and that “we look forward to engaging with Third Point LLC on their ideas toward that goal.”

Third Point declined to comment beyond its letter, but the firm was clear on where it sees the problem: “Of special concern is Intel’s human capital management problem and the absence of an articulated plan to address it,” Loeb wrote.

In June, high-ranking chip designer Jim Keller left Intel citing personal reasons. The next month, Intel delayed its next-generation chip until late 2022 and announced a shake-up in its engineering team, including the departure of chief engineer Venkata Renduchintala. CEO Bob Swan reorganized the rest of the company’s technology group to report to him.

Swan wasn’t the typical Intel CEO when he was promoted to the top role in January 2019. He comes from a financial background, having served as eBay’s chief financial officer and as a partner at investment firm General Atlantic.

The lack of technical expertise is even more apparent on Intel’s board of directors, which lacks members with chip-making experience. Ishrak, who joined the board in 2017 and became chairman in early 2020, is a longtime medical-technology executive. It’s worth wondering how a more chip-focused board might have guided the company in recent years.

I asked Swan about the board’s makeup in a November interview: “I couldn’t feel better about the diverse makeup of the representation of our board,” he told me, “so we get different thinking around the table to be able to assess the opportunities and the challenges that we have to confront.”

Loeb’s letter was vague in terms of next steps, but the activist noted the possibility of submitting board nominees at Intel’s next annual meeting.

Ultimately, Loeb’s interest aligns with the argument we made in our November story: Intel remains a chip-making heavyweight with considerable underlying value.

While much of Wall Street would like to see Intel focus exclusively on chip design, it doesn’t have to become a fully fabless chip operation like AMD. The company already has shown flexibility when it comes to outsourcing. In late 2019, an Intel executive said that “something like 20% to 25% of the wafer volume that we source comes from outside of the company.”

More flexibility would help. “Intel could materially leverage TSMC (say for 25% to 50% of their needs) in order to restore the competitiveness of their chips,” New Street Research analyst Pierre Ferragu wrote this past week. “This would also create competition for internal manufacturing, which can only do good and help repair Intel’s broken operations.”

While it’s been a difficult year for Intel, the good news is that it won’t take much for executives to give shareholders hope in 2021—just a willingness to put vanity aside and ask for some help.

The Wirecard affair, the latest in a series of corporate scandals in Germany, raises an important question. Why does Germany find it so difficult to protect investors?

Those outside Germany who admire the Rhineland model for its seemingly enlightened form of capitalism ought to examine the Wirecard collapse in detail. From my perspective, the chief problem of German corporate governance is that shareholders lack the power to hold management accountable. Wirecard shareholders tried to question Markus Braun, the company’s chief executive, at annual general meetings. But they did not have a chance to grill him. German law makes it easy for a company’s board members to evade awkward questions by talking in platitudes.

The erosion of shareholders’ rights is a scar on Germany’s corporate landscape that investor protection groups have complained about for many years. A related problem is that Germany’s two-tier system of a management board and a supervisory board does not produce the necessary stringent controls. Wirecard’s supervisory board say they did not have a clue about how executives were cooking the books.

MP Florian Toncar has called for external auditing firms to report directly to supervisory board members rather than a company’s chief financial officer. Shareholders, who have real skin in the game, also need to be involved by giving them special audit rights.

Instead, they have suffered as legislation and the federal high court reduced their influence — already small by international comparison — to allow for rapid approval of mergers or capital increases. Managers have argued that some minority shareholders were obstructing companies’ strategies in order to generate payouts for themselves. But there are less harmful ways to prevent such rare abuses than simply to strip all minority shareholders of their rights.

The silencing of investors reflects the determination of corporations to thwart active shareholders who like to ask questions. More recently, the rise of virtual AGMs has opened up new ways of restricting investor rights.

What might rebuild confidence in Germany’s capital markets? For starters, my home country could overhaul its corporate governance system and provide transparent accounting mechanisms. Good corporate governance requires effective means of private enforcement. Class action lawsuits and UK-style disclosures to investors are long overdue in Germany.

One bright spot, the EU’s second Shareholder Rights Directive, which was implemented in Germany last year, gave minority shareholders the option to oppose salary frameworks suggested by the supervisory board. While this “say-on-pay” vote is nonbinding, the board must review the plan and explain its response. This is, however, just a small step. There will need to be much more change to reach an appropriate balance of interests.

Those who seek compensation from German companies are also hampered by its 1879 civil procedure code, which was enacted when mass torts or fraud were not considered. Claimants must litigate individually, a time-consuming process that carries evidential risks and clogs the justice system. German’s next chance to address this issue comes when it transposes an EU directive on class actions into German law. This will be a matter for the government that takes power after next year’s Bundestag elections. Empowering investors would mean doing more than the bare minimum needed to comply with EU law.

Much work lies ahead in Germany to fix our ailing corporate system and the laws that protect it. In the meantime, the Wirecard scandal offers a cautionary tale for outsiders willing to learn from Germany’s mistakes. Protecting and strengthening the rights of investors is the surest way to promote corporate accountability.

Companies can dazzle investors by appearing on YouTube and other media outlets in ways those doing traditional IPOs can’t

In the run-up to an initial public offering, startups typically hunker down in a quiet period, keeping their executives out of the media to avoid running afoul of regulatory requirements.

For numerous executives that took their startups public in 2020 by merging with a special-purpose acquisition company, or SPAC, there was a different, perfectly legal approach: lengthy interviews with obscure YouTube channels frequented by individual traders, appearances on cable news, and projections that call for billions in revenue.

Publicity and forecasts of rapid growth have become routine aspects of the booming IPO alternative of going public through SPACs. The use of what are called blank-check companies, which go public with no assets and then merge with private companies, surged in 2020, raising a record $82.1 billion in 2020, up from $13.5 billion in 2019, according to Dealogic.

Startups that went public through SPACs, including many nascent companies with no revenue, have said they were attracted to the relative speed and certainty of the process, which can be completed months faster than some IPOs.

But as the tool gains favor, there are concerns about the regulatory differences between the two modes of going public. The prospect of wooing retail traders through media and inherently speculative projections brings heightened risk to stock-market investors, according to some venture capitalists and corporate-governance experts.

Because many of the companies are so young, the forecasts make them seem very attractive, said David Cowan, a partner at venture-capital firm Bessemer Venture Partners, who said he has short positions in several SPACs—meaning he is betting the stocks will fall from current levels. “These forward projections are a loophole to the guardrails the SEC has put in place to protect investors,” he said.

The Securities and Exchange Commission requires company executives to stay in a quiet period during the weeks around a public listing. Regulators don’t want companies to be marketing their stock to unsophisticated investors outside of a regimented process.

Similarly, companies generally don’t include projections in IPO documents because of regulations that put them at high risk for litigation if they miss those plans. Startups that go public through SPACs face fewer constraints because the deals are considered mergers.

The SEC didn’t respond to requests for comment. Outgoing SEC Chairman Jay Clayton told CNBC in September that he was focused on ensuring that SPACs offered the “same rigorous disclosure” as IPOs.

Many of the companies going public through SPACs say they were drawn to the process by the readily available funding—not the regulatory differences.

For Fisker Inc., FSR -4.62% an electric-vehicle startup that in July announced a deal to go public by merging with a SPAC, “the driving factor was the ability to raise money,” a company spokesman said. The differences in communication regulations didn’t affect the startup’s decision, he said.

Fisker has ambitious plans but little in terms of product or revenue today to show investors. While it had about 50 employees last spring, it disclosed projections to investors that called for it to hit $13 billion in revenue in 2025, up from zero in 2020. The founder, Henrik Fisker, went on cable television repeatedly and remained prolific on social media. After the deal’s announcement—but before the merger was completed in late October—Mr. Fisker wrote on Twitter about how the company was sold out of reservations for the SUV it plans to build in 2022, and hinted about coming news before a deal with a manufacturer was announced.

The Fisker spokesman said that Mr. Fisker wasn’t marketing to individual investors and that his interviews were included in regulatory filings to investors.

SPAC sponsors, too, have taken to the airwaves to promote their companies. Venture-capital investor Chamath Palihapitiya appeared on CNBC in September, unveiling a merger between his SPAC and real-estate company Opendoor, in which he cited the company’s expected revenue growth, among other factors.

“These guys will do almost $10 billion of revenue” in 2023, he said, more than double the company’s revenue last year.

The stock of his SPAC rose 35% the day the merger was announced. Mr. Palihapitiya and Opendoor declined to comment.

Many startup chief executive officers going public through SPACs have appealed to more-tailored venues.

After hydrogen electric-truck startup Nikola Corp. NKLA -4.51% said it was going public through a SPAC merger in March, founder Trevor Milton conducted many interviews with hosts of podcasts and YouTube channels frequented by small investors. He talked about the billions of dollars in future revenue the company expected and rejected criticism from people who said Nikola’s expected valuation was too high.

Jason MacDonald runs the YouTube finance channel JMac Investing, which he says attracts a crowd of individual investors interested in SPACs. It had just a few thousand viewers this summer, but he got an interview with Mr. Milton in May, in which the Nikola founder talked about the company’s high valuation, saying, “The business model is there, the profitability is there.”

Mr. MacDonald’s viewers have grown—he has more than 26,000 followers—and he has interviewed another CEO going public through a SPAC. He hopes for others.

“Every halfway-interesting SPAC, I’m reaching out to these companies,” Mr. MacDonald said. He said he is offering companies the chance to keep stoking interest with individual investors. “It’s going to be an interview, but it’s not hard-hitting,” he said.

The public communications have helped bring some nontraditional investors into the frenzy.

Lukas Brown, a 19-year-old student studying business in southwestern Norway, said he invested in the SPAC that merged with Nikola last spring after he saw a tweet by Mr. Milton discussing Nikola’s plans to go public.

“For me, it’s honestly pure speculation,” he said.

He said he more than tripled his initial investment before selling his shares this summer. In hindsight, he said he should have been more concerned about Mr. Milton’s frequent tweets about the stock price, which “should have been a danger sign.”

Nikola’s stock peaked in June at around $80 a share; it closed the year at $15.26. Mr. Milton resigned in September after a short seller accused the company of misrepresenting its technology. He and Nikola have denied allegations of fraud. The Justice Department has joined U.S. securities regulators in examining allegations that Nikola misled investors by making exaggerated claims about its technology.

Nikola and a representative of Mr. Milton each declined to comment for this article.

Ministers consider whether tier 4 measures will be enough to control spread of the virus

Boris Johnson has warned that he is ready to impose tougher measures to contain the spread of Covid-19, including the closure of schools, in a sombre new year’s interview.

Mr Johnson said he was “reconciled to doing what it takes”, admitting the country faced a tough start to 2021 as the virus continued to spread and with vaccines only gradually being deployed.

The prime minister said that while schools were safe, it might be necessary to close them to control the spread of the virus in parts of England that were in tier 4 — a designation that already affects 78 per cent of the population.

“The question is can we bring the virus under control and keep schools open?” Mr Johnson said in an interview with the BBC’s Andrew Marr. “We will keep things under constant review.”

He said that closing schools was “not something we necessarily want to do”, but added: “we are entirely reconciled to doing what it takes to get the virus down. That may involve tougher measures in the weeks ahead.”

Mr Johnson said that ministers were considering whether measures in tier 4 were tough enough to control the virus; the prime minister declined to use the phrase “tier 5” but that is how it is likely to be seen.

Tier 4 includes tight social restrictions, the closure of non-essential retail and advice to work from home; the big difference between tier 4 and the March 2019 lockdown is that ministers have tried to keep schools open.

The number of beds occupied by confirmed Covid patients soared by 33 per cent in England between Christmas Day and January 2, according to the latest official data, with the highest increases in the east of England, London and the south east: respectively rises of 50 per cent, 46 per cent and 45 per cent.

Chris Hopson, chief executive of NHS Providers that represents health organisations across the country, said the increase amounted to “12 more hospitals full of Covid inpatients in just eight days”.

Meanwhile, six hospitals — two in London, and others in Brighton, Oxford, Lancashire and Warwickshire — will become the first to administer the newly approved Oxford/AstraZeneca vaccine on Monday. Up to 100 more hospital sites, and another 180 GP-led sites, are due to join the rollout this week subject to final checks, the health department said.

Mr Johnson is already taking tougher action on schools. On New Year’s Day, in a policy U-turn, the government decided to keep all primary schools in London closed on January 4, having previously planned to keep them open in 10 boroughs deemed to have lower rates of infection.

Primary schools in London and other parts of the south of England will therefore remain closed until January 18; secondary schools and colleges are set to remain closed for most pupils in England — except those studying for exams — until the same date.

But the government faced a revolt from teachers over the weekend as the National Education Union advised members in primary schools set to stay open to work from home, on the basis it would be “unsafe” to return to work. 

Separately, the two main headteachers’ unions launched a legal action against the government, challenging the scientific basis for its decisions and demanding remote education for the first two weeks of term.

Mr Johnson’s aides insisted the government was sticking to its policy of holding GCSEs and A-level exams in England this summer, in spite of the disruption being caused to schooling.

The prime minister said the use of mass testing at secondary schools would “make an important difference”. Primary schools in most of England were due to return on Monday.

Hedge funds that use complex, automatic-trading strategies have been beating human stock-pickers for several years. But that all seemed to change in 2020, as wild market swings in all asset classes, driven by the virus-pandemic, along with an unprecedented flood of central bank money into capital markets has resulted in a year where human-run hedge funds trounced quants, according to Bloomberg.

Many of these so-called quants - Renaissance Institutional Diversified Alpha, Odey European, QAR Global Stock Selection, and Bridgewater Pure Alpha II - are expected to record significant losses this year as the March stock market crash upended their computer trading models.

Meanwhile, human-run funds logged in some of their best returns in a decade, including Saba, Pershing Square, and Whale Rock.

John Thaler, an equity manager at Hampton Road Capital Management, said, "stock-pickers had several years of self-inflicted under-performance in the past decade, and the narrative was that computers had defeated humans."

"Then, the quants hit an air pocket of tough relative performance, and this year, long-short equity managers outperformed by an enormous amount," Thaler added.

The bigger winners this year, as we noted, are the "13-year-old Robinhooders" who outperformed everyone.

But the stakes they held at the end of September were small, 13F filings show, Bloomberg reports.

The New York Stock Exchange said it will delist three Chinese corporations to comply with a U.S. executive order that imposed restrictions on companies identified as affiliated with the Chinese military.

China Mobile Ltd., China Telecom Corp Ltd., China Unicom Hong Kong Ltd. will be suspended from trading between January 7 and January 11, and proceedings to delist them have started, according to a statement by the exchange.

In response, China’s Ministry of Commerce said on Saturday that necessary actions will be taken to protect the rights of Chinese companies and hopes the two countries can work together to create a fair, predicable environment for businesses and investors.

The three Chinese companies have separate listings in Hong Kong.

All generate the entirety of their revenue in China and have no meaningful presence in the U.S. except for their listings there.

Their shares are also thinly traded on the New York Stock Exchange compared to their primary listings in Hong Kong, making this NYSE delisting more of a symbolic blow amid heightened geopolitical friction between the U.S. and China.

U.S. President Donald Trump signed an order in November barring American investments in Chinese firms owned or controlled by the military, in a bid to pressure Beijing over what it views as abusive business practices. The order prohibited U.S. investors from buying and selling shares in a list of Chinese companies designated by the Pentagon as having military ties.

The Chinese Foreign Ministry later accused the U.S. of “viciously slandering” its military-civilian integration policies and vowed to protect the country’s companies. Chinese officials have also threatened to respond to previous Trump administration actions with their own blacklist of U.S. companies.

The executive order has resulted in a series of companies being removed from indexes compiled by MSCI Inc., S&P Dow Jones Global Indices and FTSE Russell.

The U.S. Federal Communications Commission in May barred China Mobile from operating in the U.S.

In December, it ordered carriers to remove equipment made by Huawei Technologies Co., and begun looking into whether China Telecom should be allowed to operate in the country. China Telecom’s U.S. unit told the FCC in a June 8 filing that it’s an independent business based in the U.S. and not subject to Chinese government control.

Bitcoin surges past $30,000 as record-breaking rally resumes

Cryptocurrency picks up year where it left off with gains far outpacing mainstream asset classes

Bitcoin has surged above $30,000 for the first time, extending a record-breaking rally that saw the cryptocurrency increase by more than 300 per cent last year.

With trading in mainstream financial markets yet to get going in 2021, bitcoin has resumed its dizzying ascent, rising 18 per cent in the first few days of January to top $34,000 by Sunday morning. 

The rally has fed concerns that bitcoin is set to repeat the events of three years ago, when a bull market dramatically collapsed. When the currency set a record high in November, economist Nouriel Roubini called it a “pure speculative asset and bubble with no fundamental value”. 

But some analysts have pointed to an increase in corporate and institutional interest in bitcoin. Well-known investors such as Paul Tudor Jones and Stanley Druckenmiller have thrown their weight behind it, and crypto-focused hedge funds have outshone peers.

The recent gains have far outpaced mainstream asset classes. Bitcoin rose 305 per cent last year, compared with the 16 per cent lift in Wall Street’s blue-chip S&P 500 stock index, and gold’s 25 per cent rally.

“Despite the rise in prices and valuations, we believe the conditions remain in place for a continued rally,” said Fundstrat analysts in late December.

They also cited a clearer approach to the sector from US regulators, and the possibility that the latest fiscal stimulus package agreed by Congress could feed retail demand.

Bitcoin’s frantic rally has been helped by signs that the cryptocurrency is becoming more integrated into the financial system. In October, PayPal said US customers would be given the option of holding bitcoin in their digital wallets. In December, crypto exchange Coinbase filed with regulators to go public.