Bitcoin Briefly Crossed US$50K. Regulators Are Circling.
2 min
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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Continued stagflation and cost of living pressures are causing couples to think twice about starting a family, new data has revealed, with long term impacts expected
2 min
Australia is in the midst of a ‘baby recession’ with preliminary estimates showing the number of births in 2023 fell by more than four percent to the lowest level since 2006, according to KPMG. The consultancy firm says this reflects the impact of cost-of-living pressures on the feasibility of younger Australians starting a family.
KPMG estimates that 289,100 babies were born in 2023. This compares to 300,684 babies in 2022 and 309,996 in 2021, according to the Australian Bureau of Statistics (ABS). KPMG urban economist Terry Rawnsley said weak economic growth often leads to a reduced number of births. In 2023, ABS data shows gross domestic product (GDP) fell to 1.5 percent. Despite the population growing by 2.5 percent in 2023, GDP on a per capita basis went into negative territory, down one percent over the 12 months.
“Birth rates provide insight into long-term population growth as well as the current confidence of Australian families,” said Mr Rawnsley. “We haven’t seen such a sharp drop in births in Australia since the period of economic stagflation in the 1970s, which coincided with the initial widespread adoption of the contraceptive pill.”
Mr Rawnsley said many Australian couples delayed starting a family while the pandemic played out in 2020. The number of births fell from 305,832 in 2019 to 294,369 in 2020. Then in 2021, strong employment and vast amounts of stimulus money, along with high household savings due to lockdowns, gave couples better financial means to have a baby. This led to a rebound in births.
However, the re-opening of the global economy in 2022 led to soaring inflation. By the start of 2023, the Australian consumer price index (CPI) had risen to its highest level since 1990 at 7.8 percent per annum. By that stage, the Reserve Bank had already commenced an aggressive rate-hiking strategy to fight inflation and had raised the cash rate every month between May and December 2022.
Five more rate hikes during 2023 put further pressure on couples with mortgages and put the brakes on family formation. “This combination of the pandemic and rapid economic changes explains the spike and subsequent sharp decline in birth rates we have observed over the past four years,” Mr Rawnsley said.
The impact of high costs of living on couples’ decision to have a baby is highlighted in births data for the capital cities. KPMG estimates there were 60,860 births in Sydney in 2023, down 8.6 percent from 2019. There were 56,270 births in Melbourne, down 7.3 percent. In Perth, there were 25,020 births, down 6 percent, while in Brisbane there were 30,250 births, down 4.3 percent. Canberra was the only capital city where there was no fall in the number of births in 2023 compared to 2019.
“CPI growth in Canberra has been slightly subdued compared to that in other major cities, and the economic outlook has remained strong,” Mr Rawnsley said. “This means families have not been hurting as much as those in other capital cities, and in turn, we’ve seen a stabilisation of births in the ACT.”
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