The cryptocurrency is notoriously volatile, and anxiety remains that a crash could be on the horizon. After setting a new record above $33,000 on Saturday, prices dropped sharply to $27,630 before recovering to near $30,500 on Monday. But after closing out 2020 with gains of more than 300%, a growing number of traders — searching for yield in a low-interest-rate world — are giving Bitcoin another look.
This hunt for returns and unbridled optimism about the future isn’t just powering Bitcoin’s ascent.
Despite the onset of a devastating pandemic, 2020 managed to be the year of the “everything wins” rally. A flood of support from central banks and governments gave investors the confidence to look toward the economic boom expected to follow the Covid-19 recession. According to Deutsche Bank, 28 out of 38 non-currency assets it tracked posted positive returns over the past 12 months.
Investors are bringing that same energy into 2021, despite an alarming virus outlook and the spread of new, more contagious Covid-19 variants.
“My fundamental thesis on the near-term capital markets is that we will enter 2021 with a robust, almost unprecedented, market environment,” LionTree CEO Aryeh Bourkoff said in a December letter to clients.
Bourkoff pointed to three forces that should keep powering assets like stocks: the continued positive impact of stimulus, the distribution of Covid-19 vaccines and the growing ease with which companies can raise capital on public markets.
In short, the big trends that defined the end of 2020, when stocks reached record highs, are expected to have staying power.
The mood is clear as traders return to work after the holidays, with stocks in Asia and Europe rising and US stock futures gaining ground. Gold, silver, oil prices and the euro are up, too. The major exception continues to be the US dollar, which remains under pressure.
“While we hope (and expect) things to be a lot better at some point this year, we realize that the journey will be bumpy and starts with many of us working from home, keeping our distance from others and trying to keep loved ones safe,” said Societe Generale strategist Kit Juckes. “Financial markets have, however, been in a post-pandemic world since the end of March.”
MGM wants to buy Ladbrokes owner Entain
Ladbrokes owner Entain said in a statement Monday that it has received an £8.1 billion ($11.1 billion) proposal from MGM. But Entain added that it believed the offer, a 22% premium over its closing price on Dec. 31, “significantly undervalues” the company’s shares and its prospects.
“The board has also asked [MGM] to provide additional information in respect of the strategic rationale for a combination of the two companies,” Entain said. The UK company has received multiple proposals from MGM, its statement suggested. Representatives for MGM did not immediately respond to a request for comment.
Investor insight: Shares in Entain increased more than 26% on Monday, surging above the price per share offered by MGM in a sign that some investors expect another offer from the US company, or for another bidder to come on the scene. MGM is a major player in Las Vegas, operating casinos including the Bellagio and Mandalay Bay.
The companies have an existing relationship. MGM and Entain are joint owners of BetMGM, a sports betting and online gaming company that operates in more than a dozen US states. Entain, which owns brands including Eurobet, Ladbrokes and Sportingbet, operates both retail and online businesses.
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, told clients he “can understand why MGM wants to take control” of Entain, given that the two companies are already working together on sports betting in the United States. But he cautioned that a higher price “may prove too much for MGM shareholders to swallow.”
Big picture: Bankers were busy over the holiday period as companies look to mergers and acquisitions that could boost business in a post-Covid world. Expect plenty more deal chatter in the early days of 2021.
Tesla hits a milestone
Production and delivery is up by more than a third compared to 2019. The numbers are especially impressive considering the company’s Fremont, California factory was shut for nearly two months from mid-March to early May as the state tried to contain coronavirus infections.
The company produced 179,757 cars in the fourth quarter, up 71% from a year earlier, and delivered 180,570, a 61% jump.
Investor insight: The result “is a major feather in the cap for the company and the bulls,” given the hit to consumers’ buying power during the pandemic, analyst Dan Ives of Wedbush Securities said. The surprise is sending shares up 2% in premarket trading.
For those keeping track, Tesla’s stock closed out 2020 with gains of 743%. Now, it’s kicking off 2021 on a high note — even though many on Wall Street, and CEO Elon Musk himself, have warned the share price is too high.
US stock futures are up after the S&P 500 and Dow finished 2020 at record highs. Markets in Europe gained in early trading, while stocks in Asia rose outside Japan, which may enter a state of emergency this week as the country grapples with soaring coronavirus cases.
OPEC and allies meet Monday via videoconference.
Coming tomorrow: How did the US manufacturing sector fare in December?