Bitcoin’s climb above US$50,000 for the first time on Tuesday marks a psychological milestone for investors—but it could trigger extra regulatory scrutiny.
The move higher means the cryptocurrency has more than doubled in value in just two months after several splashy news announcements. The gains come after a 303% increase in Bitcoin’s price last year.
In recent trading, Bitcoin was selling for $48.726. Bitcoin was up more than 4% earlier on Tuesday but has retreated back. Its price is up nearly 70% so far this year.
This month, Elon Musk’s Tesla (ticker: TSLA) said it bought $1.5 billion of Bitcoin and will start accepting it as payment for its electric vehicles at some point soon. BNY Mellon said it would hold, transfer, and issue Bitcoin for clients, and Mastercard (MA) said it would integrate Bitcoin into its payments network this year.
A possible catalyst for Tuesday’s move higher: MicroStrategy (MSTR), a business-intelligence company that has become a Bitcoin investing platform, said it would sell $600 million of convertible notes to buy the crypto. It sold $650 million of notes in December to do the same thing.
Shares of MicroStrategy fell 3.7% on Tuesday but are up 570% over the past year, compared with the S&P 500’s 16.7% one-year gain.
Bitcoin was once dismissed as a quirky sideshow in finance, with a shadowy history and cultlike following. Its increasingly mainstream appeal puts a spotlight on regulation as banks and professional traders take it seriously.
Earlier this month, newly confirmed Treasury Secretary Janet Yellen told an industry innovation policy roundtable that she sees “the promise” of these new currencies. “But I also see the reality: Cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”
President Joe Biden’s nominee to head the Securities and Exchange Commission, Gary Gensler, is also well-versed in crypto, having spent the past few years teaching about digital currency and the blockchain technology that underlies it at the Massachusetts Institute of Technology.
“Bitcoin and other cryptocurrencies will come under the spotlight from watchdogs like never before and this can be expected to create volatility in the market,” said Nigel Green, the founder and CEO of U.K.-based deVere Group, a financial advisory firm.
DeVere sold half its Bitcoin holdings in December, when the price had surged to $25,000.
Green said in a December blog post about the sale that it was to take profit after last year’s run-up. “It was not due to a lack of belief in Bitcoin, or the concept of digital currencies,” the post said.
Wedbush analyst Daniel Ives said Tesla’s embrace of Bitcoin could be a “game-changer” for the crypto. “We believe the trend of transactions, Bitcoin investments, and blockchain-driven initiatives could surge over the coming years,” he said. “This Bitcoin mania is not a fad, in our opinion, but rather the start of a new age on the digital currency front.”
More financial and payment companies are pushing Bitcoin into the mainstream. Robinhood, Square (SQ), and PayPal Holdings (PYPL) allow Bitcoin trading. Fidelity Investments has a business to store and trade crypto.
And more are considering jumping in. In January, asset management giant BlackRock (BLK) gave two of its funds the go-ahead to invest in crypto.
A unit of Morgan Stanley’s (MS) asset-management business is reportedly examining adding it as an option for investors. JPMorgan Chase (JPM) Co-President Dan Pinto said last week client demand isn’t there yet, but it will get there.
“If over time an asset class develops that is going to be used by different asset managers and investors, we will have to be involved,” Pinto said on CNBC.
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U.K.-listed mining giant’s chairman says the proposal undervalues the company
LONDON— Anglo American on Friday rejected a $39 billion takeover proposal from rival BHP, saying the bid “significantly undervalues” the company and setting the stage for a potential bidding war.
London-listed Anglo American said the unsolicited proposal, which was made earlier this month and which became public this week, features an unattractive structure that is too uncertain and complex .
Anglo American Chairman Stuart Chambers said the company stands to benefit from its portfolio of assets, including copper, that are likely to experience growth from trends around the energy transition. BHP’s bid, Chambers said, is opportunistic and dilutive for shareholders.
BHP’s all-share offer valued Anglo American at about $38.8 billion, and would have been contingent upon Anglo American spinning off shareholdings in two South African-listed units. The proposal represented a premium of about 31%, not including the South African-listed units, based on Tuesday’s closing prices.
Some analysts had predicted Anglo would find the bid too low and are expecting BHP to return with another. BHP has until May 22 to make a firm offer, though the deadline can be extended. Industry participants expect other large miners to also take a run at Anglo, whose share price has dropped since 2022 as lower commodity prices have ripped through the industry.
A tie-up between BHP and Anglo American, which would be the largest mining deal on record, would illustrate the growing importance of copper, a metal essential to clean-energy products , to a sector that has long relied on Chinese industrialisation to boost profits.
Copper represents some 30% of Anglo American’s output, while BHP counts a majority stake in Chile’s Escondida, the world’s biggest copper mine, among its assets. BHP bought Australian copper-and-gold miner Oz Minerals for $6.34 billion in May last year, representing its biggest acquisition since 2011.
Copper prices are up some 15% so far this year, reflecting expectations that demand for the metal will rise as the world decarbonises and supply will be constrained. Electric vehicles and wind farms use copper in much greater quantities than gasoline-powered cars and coal-fired power stations.
Anglo American has been reviewing its assets in recent months, and has held early conversations with potential buyers for its storied De Beers diamond unit, which it values at more than $7 billion, The Wall Street Journal reported Thursday.
Activist firm Elliott Investment Management holds a stake in Anglo American worth roughly $1 billion, accumulated over several months and before BHP’s move on the miner, according to a person familiar with the matter. The firm is widely known for its campaigns to push companies for change to boost their stock prices. Its view of the Anglo American holding couldn’t be learned.
That said, a jump in Anglo American’s share price following BHP’s takeover offer indicates Elliott has already profited from its holding, potentially reducing any incentive for it to take any action until the outcome of BHP’s bid becomes clearer.
Anglo’s stock on Friday traded above the implied value of BHP’s offer, indicating the market expects a higher bid to emerge.
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