Investors are gearing up for a turbocharged 2021. Want evidence? Look at the price of Bitcoin.
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.”
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