Why Bitcoin Is Surging, Again, Up 130% This Year
New wave of speculative investment drives up prices
The price of bitcoin surged over the weekend and into Monday morning as a new wave of speculative investment drove up prices.
Bitcoin traded above $2,200 on Monday, according to the news and research website CoinDesk. That was up about 9% on the day and more than 15% from Friday’s closing price of $1,913, which itself was a fresh high.
Bitcoin is up more than 130% this year alone, and about 397% from one year ago.
The market for the nearly decade-old cryptocurrency is volatile and opaque. But several trends are underpinning the recent rise, including the perception of increased geopolitical risk and new buying from Japanese investors.
A new surge of speculative investment in virtual currencies in general is also popping up owing to new fundraising efforts called token sales, or initial coin offerings. Startups are building bitcoin-like coins into their products, and offering them to the public ahead of a product launch. Most are being built on an alternative cryptoplatform called Ethereum. Firms raised nearly $30 million through the first two weeks of May alone.
Another factor is Asia, and specifically Japan, where bitcoin just came under the nation’s regulatory umbrella this spring, sparking a surge of trading from the county. “The Japanese have caught the bitcoin bug,” said Charles Hayter of the research firm Crypto Compare.
It isn’t clear why Japanese investors would be diversifying their holdings into bitcoin at the moment, though the country has a contingent of investors open to high-tech investments.
While bitcoin moved above $2,100 in the U.S., it was trading at a higher price in yen terms, Mr. Hayter said. That gap sparked a frenzied arbitrage trade. Mr. Hayter warned, however, that, without fresh fundamentals supporting bitcoin, “irrational exuberance is taking hold” in the Japanese bitcoin market.
There is also speculation that a longstanding and divisive bitcoin debate about the structure of trading in the market may soon be settled, opening up more demand for the coin. Ahead of a large conference in New York called Consensus, there is speculation that a solution to the so-called scaling debate could be resolved.
At the same conference, Fidelity Investments Chairman and Chief Executive Abigail Johnson is scheduled to make a rare public speech to discuss the giant mutual-fund company’s efforts to use bitcoin and its underlying technology, blockchain.
Investors hold bitcoin for a variety of reasons, some speculative and driven by the sharp gains in the last 12 months. Others believe it will someday act like gold, a country-neutral investment that tends to do well when faith in government-backed currencies wane.
One possible explanation for the rise in bitcoin is more nefarious. Hackers in recent ransomware attacks like this month’s WannaCry have sometimes asked to be paid in bitcoin. In such attacks, victimized corporations or government-backed entities have to make a tough decision to either pay the hackers in the currency of their choice or risk losing important data. Some bitcoin watchers speculate that entities may be stockpiling the currency in anticipation of further attacks.
Either way, some traders are warning that the current surge very much looks like past cycles where bitcoin moved sharply higher only to tumble quickly and without warning.
“It looks like Bitcoin is going to follow another boom-bust cycle,” Vinny Lingham, founder of bitcoin-based startup Civic, wrote on Sunday. That said, it is “hard to call a top.”
*ALERE UPDATE INCREASES CONVICTION FOR $51 DEAL CLOSE: CANACCORD
*ALERE DOWNSIDE/BREAK PRICE UPPED TO $45 FROM $34 AT CANACCORD
Germany and France pledge to accelerate eurozone reforms
Finance ministers consider boosting co-operation between top companies
Germany and France are considering boosting co-operation between their largest companies as part of an initiative started by Chancellor Angela Merkel and President Emmanuel Macron to strengthen bilateral relations and revive the eurozone economy.
Wolfgang Schäuble, Germany’s finance minister, and Bruno Le Maire, his new French counterpart, announced the proposal on Monday among plans to improve economic policy co-ordination and accelerate eurozone reforms.
Paris and Berlin want urgently to improve ties following Mr Macron’s election as president. Mr Macron met Ms Merkel the day after his inauguration last week.
Mr Schäuble and Mr Le Maire said in a joint statement that “deeper co-ordination and integration of economic policy is needed in order to achieve real economic convergence” in the eurozone.
“Despite the currently strengthening economic recovery in the eurozone, not all member states have recovered completely from the last crisis, and the eurozone is economically vulnerable due to major macroeconomic imbalances, low core inflation and significant financial fragmentation,” they said.
Emphasising the role of French-German relations as the EU’s motor, the ministers said they planned to develop “common bilateral initiatives which could pave the way for future European policy”.
Talks “could include a consultation process involving national companies so as to improve German-French economic co-operation”, the statement said.
A working group will report to a joint Franco-German cabinet meeting in July.
The ministers did not specify how business would be consulted. However, there is speculation that Mr Macron’s calls for boosting eurozone investment could include Franco-German projects in the digital economy and in energy.
The talk of co-operation in energy follows reports that energy companies RWE and Engie are looking at a possible share swap that would create a €50bn Franco-German group.
The two countries have long talked about an energy alliance but investment bankers stressed that any combination was unlikely ahead of German elections in September.
Other ideas for strengthening the eurozone include completing its banking union as well as reviving proposals for corporate tax harmonisation in the EU. Mr Schäuble said Germany and France could either propose a joint corporate tax or concentrate on pushing ahead with efforts to create a harmonised basis for assessing European corporate tax.
Mr Le Maire said: “We’ve been talking for years about progress in integrating the eurozone, but things aren’t advancing quickly enough or far enough. We are determined to get things moving faster and further.”
Mr Le Maire, who was on his first official foreign visit, spoke partly in German at a joint press conference with Mr Schäuble, as if to emphasise the new spirit of co-operation that Paris and Berlin want to inject into their relationship.
Edouard Philippe, the new French prime minister, is also a fluent German speaker, as is Philippe Etienne, the former French ambassador to Berlin who is Mr Macron’s top foreign policy adviser.
Mr Le Maire repeated Mr Macron’s pledge to reform the French economy, saying that France would respect its commitments to reduce its deficit and public debt. “We are not doing this to please Europe or the European Commission or Germany. But we are doing it because it’s good for France.”
Gapping up
In reaction to strong earnings/guidance:
In reaction to strong earnings/guidance:
- CMCM +12.3%, YRD +4.2%, SMG +1%
M&A news:
- NUTR +49.8% ( to be acquired by private-equity firm HGGC for $41.80/share)
- HUN +7.6% (Huntsman and Clariant (CLZNY) to combine in merger of equals with $20 bln enterprise value)
- AEG +2.4% (to divest its two largest US run-off businesses)
Other news:
- BIOC +21% (awarded a U.S. patent for the broad use of antibodies for the capture of any target of interest on any solid surface from any sample type)
- RDUS +15.6% (benefiting from AMGN's announcement that cardiovascular adverse events were observed as a new safety signal in patients in Phase 3 EVENITY data)
- CRMD +6.1% (CEO disclosed purchase of 75000 shares worth $36K)
- BLRX +5.9% (announces filing of regulatory submissions required to commence a Phase 1b trial for BL-8040)
- GNC +5.1% (in sympathy with NUTR)
- BX +5.1% (confirmed it will launch $40 bln infrastructure investment vehicle and new infrastructure business)
- MYOV +4.6% (presentation of 'positive' Phase 2 data for Relugolix)
- MOMO +3.6% (continued strength)
- LMT +3% (LMT and Kingdom of Saudi Arabia sign MOU build defense capabilities in the KSA through 2030)
- RTN +2.7% (RTN and the Saudi Arabia Military Industries Company signed a Memorandum of Understanding)
- ZTO +2.5% (authorizes $300 mln share repurchase program)
- F +2.1% (reports of plans to replace its CEO Mark Fields, according to NY Times; will host a news conference at 9:45 ET today)
- VRX +1% (launches renu Advanced Formula multi-purpose solution for soft and silicone hydrogel contact lenses)
Analyst comments:
- NTNX +9.6% (upgraded to Buy from Neutral at Goldman)
- AAOI +3.8% (initiated with a Strong Buy at Needham)
- CREE +3.1% (upgraded to Mkt Outperform from Mkt Perform at JMP Securities)
- QCOM +1.7% (upgraded to Overweight from Neutral at JP Morgan)
- MYL +1.2% (upgraded to Overweight from Equal Weight at Barclays)
Gapping down
In reaction to disappointing earnings/guidance:
In reaction to disappointing earnings/guidance:
- BAH -0.5%
Select Brazil related names showing weakness:
- ITUB -2.6%, PBR -2.5%, VALE -1.4%, ABEV -1.4%, CIG -1.3%, SBS -1%, SAN -0.9%
Other news:
- GALT -8.9% (files for $100 mln mixed securities shelf offering and 2,994,279 share common stock offering by holder)
- LJPC -8.8% (reports Phase 3 study of LJPC-501), GLYC -3.6% (modestly pulling back following last week's advance)
- TTD -2.7% (files for $200 mln Class A Common Stock shelf offering by holders)
- AMGN -2.6% (cardiovascular adverse events were observed as a new safety signal in patients in Phase 3 EVENITY data)
- P -1.9% (NY Post details that PayPal (PYPL) has sued Pandora (P) over its logo)
- IRT -1.2% (filed for $1 bln mixed securities shelf offering)
Analyst comments:
- SNCR -5.5% (downgraded to Underperform from Neutral at Credit Suisse)
- CNC -2.1% (downgraded to Neutral from Overweight at JP Morgan)
- NHI -0.9% (downgraded to Underperform from Neutral at BofA/Merrill)
$12bn Australian coal mine deferred in subsidy war
India’s Adani wants ‘royalty holiday’ for huge project opposed by environmentalists
A company controlled by Indian billionaire Gautam Adani has deferred a decision to build one of the world’s biggest coal mines in Australia following political wrangling over whether it should be granted financial concessions in the form of a “royalty holiday”.
The A$16.5bn ($12.3bn) project has divided the state government over the merits of providing taxpayer support for a mine, which would create jobs in Queensland but generate environmental costs by exporting large volumes of greenhouse gas emissions.
One sustainable energy proponent sees the deferment as blatant political “blackmail” of the Queensland government.
On Monday the Labor government in the state of Queensland was unable to agree on whether to provide tax relief to Adani, a move that prompted the Indian company to defer its own decision on a final investment decision.
“Adani has been advised today that the Queensland cabinet did not consider any submission or make a decision on royalties for the Adani project,” said Ron Watson, an Adani spokesman.
“In light of this Adani has today deferred a decision by its board on a final investment decision until the government decision is clear.”
The Adani project has become a potent symbol of the global battle between environmentalists and the fossil fuel industry, attracting a series of legal challenges that have already caused years of delays.
The proposed Carmichael mine sits in Queensland’s Galilee Basin, one of the world’s largest untapped coal resources. Adani plans to ship the coal to India from Abbot Point, a port near the Great Barrier Reef marine park.
A sharp fall in thermal coal prices since 2012 and concerns about the viability of coal projects in the face of international efforts to tackle climate change have complicated Adani’s efforts to fund the project. It recently applied for a A$900m government grant to help it finance a railway to bring the coal from the mine to a port it owns near the Great Barrier Reef marine park.
Adani is also seeking a royalty holiday from the Queensland government, which would dramatically reduce the amount of royalties it pays in the early years of the project. Under the proposal the royalties would be repaid later when the financial pressures on the project are less severe.
Queensland premier Annastacia Palaszczuk told reporters the issue had not come before cabinet on Monday, adding “every single dollar owed will be paid” by Adani.
Queensland’s government in April gave the go-ahead for construction, subject to the Indian company demonstrating it has raised enough money to fund the project.
Financial analysts say a recent recovery in thermal coal prices may help the project’s backers, but many question whether the project is needed now because the seaborne coal market remains well supplied.
Tim Buckley, an analyst at the US-based Institute for Energy Economics and Financial Analysis, an organisation aiming to promote sustainable energy, considers the deferment by Adani to be blatant political “blackmail” of the Queensland government.
“This just shows yet again this project is not commercial and is unbankable without public subsidies,” he said. Adani declined to comment.
Other companies plan to develop mines in the same Galilee basin, including GVK Hancock, a joint venture between India’s GVK and Hancock Prospecting, which is controlled by Gina Rinehart, Australia’s richest person. But this is likely to prove difficult unless Adani is able to finance construction of a railway to transport coal to the port.
Early premarket gappers
Gapping up:
- RDUS +15.9%, CMCM +9%, HUN +8.6%, YRD +8.2%, GNC +6.6%, RTN+5.3%, MOMO +5.3%, BX +4.6%, LMT +4.1%, AEG +2.8%, F +2.2%, WLL+2%, NVO +1.6%, RIO +1.6%, CCE +1.4%, QCOM +1.3%, MYL +1.3%, FL+1.2%, NTWK +1.1%, GE +1%, VOD +1%, BABA +0.8%, NVDA +0.7%
Gapping down:
- LJPC -12.5%, SNCR -4.3%, GLYC -3.6%, AMGN -2.6%, STM -1.8%, SAN-1.5%, PUK -1.2%, ASML -1%, SNY -0.9%, GSK -0.6%, BAH -0.5