Bitcoin surges past $50,000 for first time

Bitcoin rose above $50,000 for the first time on Tuesday while European equities eased after soaring the previous day on reduced coronavirus fears and thanks to mounting optimism over US President Joe Biden’s vast stimulus plan, traders said.

Bitcoin hit a new high of $50,602, and was last up 3.3% at $49,537. It has risen around 72% so far this year, with most of the gains coming after electric carmaker Tesla said it had bought $1.5 billion in bitcoin.

It also said it would accept the currency as payment.

But Tesla was only the latest in a string of large investments that have vaulted bitcoin from the fringes of finance to company balance sheets and Wall Street dealing desks, as U.S. firms and traditional money managers have started to buy the cryptocurrency.

“The recent market conditions and events both in the crypto space and the financial world at large put such a price movement within the realm of possibility,” said Jacob Skaaning of crypto hedge fund ARK36.

“However, I’d like to offer a word of caution: while my long-term outlook is bullish, massive price fluctuations along the way are only to be expected. Bitcoin is still extremely volatile.”

The rush in 2021 by retail and institutional investors comes on top of a 300% rise last year as investors search for alternatives to the dollar because of the U.S. Federal Reserve’s 0% interest rates. It traded at a few hundred dollars only five years earlier.

Meanwhile oil held close to 13-month highs on keen demand hopes amid a severe cold snap in Texas.

Asia’s leading stock markets closed with strong gains and the dollar declined against the euro and yen.

Sterling soared to $1.3952, the highest level for nearly three years.

The euro sank to 87.06 pence, the lowest point since May.

A strong pound tends to dent London share prices because it weighs on the profits of dollar-earning multinationals.

Wall Street reopens from a long holiday weekend to catch up with Monday’s rally, which was rooted in Covid-19 vaccine rollouts, slowing infections, easing lockdowns and hopes of reopening economies.

“The return of US markets from their long weekend means that the focus for all investors will be on the Biden administration’s push for a big stimulus programme,” said analyst Chris Beauchamp at online trading firm IG.

While Biden’s spending package is widely expected to pass through the Democrat-controlled Congress, analysts have warned it might not be as big as the $1.9 trillion he proposed.

Meanwhile with Britain and the United States leading the way in rolling out vaccines at the same time as they see a sharp slowdown in new cases and deaths, there are growing calls for governments to lift strict containment measures and get life back to a semblance of normal.

The United States on Sunday reported its lowest daily infection number since October, as Britain easily hit a key target for immunising its highest-risk people.

The European Union — which is struggling with its vaccine programme — has ramped up plans to deliver more jabs.

In London, the mining sector was also in sharp focus on Tuesday.

Shares in Glencore jumped 3.5 percent to 292.10 pence after the Swiss giant restored its shareholder dividend despite deepening losses.

Anglo-Australian miner BHP jumped 1.7 percent to 2,267 pence on news of soaring profit and a bumper dividend increase by the group.

– Key figures around 1200 GMT –

London – FTSE 100: FLAT at 6,761.36 points

Frankfurt – DAX 30: DOWN 0.3 percent at 14,073.29

Paris – CAC 40: DOWN 0.1 percent at 5,778.39

EURO STOXX 50: DOWN 0.2 percent at 3,727.60

Tokyo – Nikkei 225: UP 1.3 percent to 30,467.75 (close)

Hong Kong – Hang Seng: UP 1.9 percent to 30,746.66 (close)

Shanghai – Composite: Closed for a holiday

New York – Dow: Closed for a holiday (Monday)

Pound/dollar: UP at $1.3927 from $1.3903 at 2200 GMT

Euro/dollar: UP at $1.2164 from $1.2119

Euro/pound: UP at 87.34 pence from 87.24 pence

Dollar/yen: DOWN at 105.29 yen from 105.38 yen

Brent North Sea crude: DOWN 0.2 percent at $63.17 per barrel

West Texas Intermediate: UP 0.6 percent at $59.83