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• Bitcoin cash reached an all-time high of $2,500 a coin early Sunday morning, surpassing Ethereum as the second largest cryptocurrency on the market.
• The coin was trading up 14.7% at $1,525 by 11:35 AM ET.

Bitcoin cash had a wild night.

The cryptocurrency skyrocketed to an all-time high of $2,500 a coin early Sunday morning. It also surpassed Ethereum as the second largest cryptocurrency by market cap, according to CoinMarketCap.com.

Bitcoin cash, which notably split from the original bitcoin in August, was gaining on its sister coin up until around 2 a.m. ET. It later shed about $1,000 and by 11:35 a.m ET was only trading up 14.7% at $1,525, slipping back below Ethereum's market cap.

Still, it was an impressive march for a coin which has spent most of its existence trading between $300 and $500. Ethereum founder Vitalik Buterin even chimed in on the news in a tweet late Saturday night to congratulate the coin's main backers.

Bitcoin cash's rise appears to have come at the expense of bitcoin, which dropped to a low of $5,512 per coin over night. It hit a record high of $7,828 on Wednesday.

By 12 p.m. ET, bitcoin was back up at $6,160.

Bitcoin has been sliding since developers behind a split, known as Segwit2X, revoked their support for the plan on Wednesday.

Segwit2X would have increased the size of the blocks underpinning the bitcoin blockchain network to enable it to process more transactions more quickly. Backers thought the plan would help the digital currency scale faster.

Cryptocurrency experts told Business Insider that backers of Segwit2X are likely dumping their bitcoin and jumping on the bitcoin cash bandwagon. Both Segwit2X and bitcoin cash were conceived with the same intention to help bitcoin scale faster by increasing the size of its blocks.

"When you look at the trends, it does look like many Segwit2X supporters have switched to bitcoin cash," Abhishek Pitto, CEO of Nucleus Vision, told Business Insider.

Kyle Samani, a managing partner of MultiCoin Capital told cryptowatcher Laura Shen a number of bitcoin whales, wealthy early adopters of crypto, are moving over from bitcoin to bitcoin cash.

Here's Samani (emphasis ours):

"There were lots of bitcoin cash whales who were in early on bitcoin who were waiting to see what would happen with 2x. I know many Bitcoin OGs who have dumped $10m+ of BTC for BCH ... Turns out there were a lot more BCH ideologues than we all thought."

Samson Mow, chief strategy officer at Blockstream and bitcoin evangelist, told Business Insider bitcoin cash's price pump will be short lived.

"[Bitcoin cash] is just being pumped as many other altcoins have been in the past, and inevitably the pumpers will cash out," he said. "The pump is already losing steam and can't be sustained because there's no real market for [bitcoin cash]."

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• Bitcoin cash reached an all-time high of $2,500 a coin early Sunday morning, surpassing Ethereum as the second largest cryptocurrency on the market.
• The coin was trading up 14.7% at $1,525 by 11:35 AM ET.

Bitcoin cash had a wild night.

The cryptocurrency skyrocketed to an all-time high of $2,500 a coin early Sunday morning. It also surpassed Ethereum as the second largest cryptocurrency by market cap, according to CoinMarketCap.com.

Bitcoin cash, which notably split from the original bitcoin in August, was gaining on its sister coin up until around 2 a.m. ET. It later shed about $1,000 and by 11:35 a.m ET was only trading up 14.7% at $1,525, slipping back below Ethereum's market cap.

Still, it was an impressive march for a coin which has spent most of its existence trading between $300 and $500. Ethereum founder Vitalik Buterin even chimed in on the news in a tweet late Saturday night to congratulate the coin's main backers.

Bitcoin cash's rise appears to have come at the expense of bitcoin, which dropped to a low of $5,512 per coin over night. It hit a record high of $7,828 on Wednesday.

By 12 p.m. ET, bitcoin was back up at $6,160.

Bitcoin has been sliding since developers behind a split, known as Segwit2X, revoked their support for the plan on Wednesday.

Segwit2X would have increased the size of the blocks underpinning the bitcoin blockchain network to enable it to process more transactions more quickly. Backers thought the plan would help the digital currency scale faster.

Cryptocurrency experts told Business Insider that backers of Segwit2X are likely dumping their bitcoin and jumping on the bitcoin cash bandwagon. Both Segwit2X and bitcoin cash were conceived with the same intention to help bitcoin scale faster by increasing the size of its blocks.

"When you look at the trends, it does look like many Segwit2X supporters have switched to bitcoin cash," Abhishek Pitto, CEO of Nucleus Vision, told Business Insider.

Kyle Samani, a managing partner of MultiCoin Capital told cryptowatcher Laura Shen a number of bitcoin whales, wealthy early adopters of crypto, are moving over from bitcoin to bitcoin cash.

Here's Samani (emphasis ours):

"There were lots of bitcoin cash whales who were in early on bitcoin who were waiting to see what would happen with 2x. I know many Bitcoin OGs who have dumped $10m+ of BTC for BCH ... Turns out there were a lot more BCH ideologues than we all thought."

Samson Mow, chief strategy officer at Blockstream and bitcoin evangelist, told Business Insider bitcoin cash's price pump will be short lived.

"[Bitcoin cash] is just being pumped as many other altcoins have been in the past, and inevitably the pumpers will cash out," he said. "The pump is already losing steam and can't be sustained because there's no real market for [bitcoin cash]."

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• Daimler is investing $11 billion to electrify its fleet of vehicles by 2020.
• Tesla's stock has rivaled General Motors and Ford as people continue to clamor for the high-tech, electric vehicles.
• The two automakers will compete in 2020 when they release their battery-powered SUVs.

Tesla has had a meteoric rise as an underdog company, but the next five years could be its biggest challenge yet.

Major automakers from across the globe are preparing massive electric-car rollouts, perhaps none as large as Daimler, Mercedes' parent company. The German automaker plans to electrify its fleet of cars by 2020 and is investing $11 billion to make it happen.

In many ways, taking down Tesla is no easy feat. The company has secured brand loyalty on par with Apple, which can be attributed to the admiration surrounding Tesla CEO Elon Musk's stated commitment to building a sustainable future. It has pushed the industry in ways that have never been seen before, from implementing over-the-air updates to challenging the traditional dealership model.

Yet Tesla has some weaknesses, mostly its struggle to execute on production. The Model S and Model X both suffered delays and the company has yet to overcome its manufacturing hurdles — Tesla produced 260 Model 3s in the third-quarter out of a targeted 1,500 sedans due to "production bottlenecks."

Daimler has a shot of taking down Tesla, but it won't be easy.

Daimler has to rebrand itself to compete with Tesla

Daimler hasn't been shy about its intention to take on Tesla. 

The Germany automaker announced in September that it would invest $1 billion in its Alabama plant to build an electric SUV, which is slated to hit the market in 2020. Many media outlets were quick to point out this was a direct affront to Tesla, though Musk didn't see it that way:

Daimler took an apparent shot back at Tesla when it said it had already announced an additional $10-billion investment in next-generation electric vehicles:

Musk's tweet didn't prompt Daimler's $10 billion investment, as the company had announced the electric-car funding in 2016.

It would also be reductive to argue that Tesla's prowess in the EV space was the single defining characteristic that pushed Daimler to embrace electric cars. China's announcement that it will ban diesel- and gas-powered cars going forward is a major influencing factor, considering the country is the largest auto market in the world.

Likely, Daimler's recent competitive streak with Tesla on Twitter is more of an acknowledgment that to win the electric-vehicle race requires convincing consumers that Mercedes cars can compete with the products of Elon Musk.  If electric cars are the inevitable future, Daimler can't ignore Tesla's position in the market.

Like all German car companies, Daimler's identity is connected to the diesel engine — Mercedes cars are seen as the classic speed machines of the Autobahn rather than high-tech models of a driverless future. It will take some work for Mercedes to rebrand itself as a Tesla competitor.

"It's not in their DNA and their history because they are much more of a performance brand," Gary Silberg, the Americas head of automotive at KPMG, said in an interview. "The electric architecture of the vehicle is different than their great prowess with diesel and ICE engines, so that's certainly a change."

Daimler will look to beat Tesla in China

The fiercest competition will happen in China — not only because it's the largest car market in the world, but because there's still time to carve out a sizeable portion of the market.

Tesla is working fast to lay the groundwork for a push in China. It plans to build a factory in Shanghai that will start producing cars in 2020. It also secured backing from Tencent, which Musk said will allow the Chinese firm to become a passive advisor.

Daimler already has set-up a joint venture with Chinese automaker BAIC. The two announced in July they were investing $750 million in Chinese electric-vehicle production so Mercedes can secure a "substantial share" of the market by 2025.

Wilko Stark, Mercedes' vice president of strategy, said in an interview that China will ultimately be the company's most important market. 

"China is our biggest market and will stay so in the future by far," Stark said. "As an incumbent, we have a big advantage because we know the Chinese market very well."

Daimler will also aim to replicate the 'Tesla ecosystem'

Daimler has also started laying the foundation to take on Tesla by mimicking Musk's vision for a solar-based ecosystem.

Musk has said that the ideal home would have solar panels on the roof, a Tesla in the garage, and a home battery to tie everything together.

Tesla launched an energy division in 2015 to start selling its residential battery, the Powerwall. The automaker bought SolarCity in a deal worth $2.1 billion last November to vertically integrate all of the different pieces.

Mercedes took a shot at Tesla in March when it launched its home battery on Tesla's home turf of California, which is also sold in Germany and the United Kingdom. The US launch was due to a new partnership with solar-panel installer Vivint.

Boris von Bormann, CEO of Mercedes' energy division, said the Vivint partnership was meant to support Daimler's electric vehicle push in the US in 2019.

"We’re looking really to build the total ecosystem around the vehicle," Bormann told Business Insider. "We’re looking at how we prepare the infrastructure so that the transition from a combustion engine to an electric engine happens as smoothly as possible."

Daimler is investing $1 billion in its Alabama plant to build the Mercedes EQ, an electric SUV that will hit the market in 2020. Stark said Daimler deliberately chose to release an SUV because demand for the larger vehicles have been high the last several years.

The EQ will hit the market at the same time as Tesla's Model Y SUV, meaning Tesla will have direct competition for the first time. Tesla did have some competition this year when its Model 3 hit the market at the same time as the Chevy Bolt, but it's difficult to compare completely different vehicle types with varying price tags.

"The US will be a key footprint for our battery-electric vehicle strategy," Wilko Andreas Stark, Mercedes' VP of strategy, said in an interview. "We are pretty confident we will convince the customer that [the EQ] will be the best offer on the market."

There's no clear winner in the heated EV race — but Tesla will need to prepare for competition

Daimler's sheer size doesn't necessarily mean it has the company beat; many people buy a Tesla because they want a Tesla, not an electric car. Tesla is also a popular choice among lucrative Chinese buyers.

But it's clear that Tesla has thrived in a market with very few viable contenders — 2020 will be the first test as to whether Tesla can survive when a giant like Daimler tries to eat its lunch.

"Tesla did a great job as a frontrunner, but all of the others will come now," Stark said. "We believe our vehicles coming up are more attractive to Tesla in the long term."

KPMG's Silberg said Tesla has an advantage when it comes to its story and general branding. Tesla hasn't had to pay a dime for marketing and still secured 455,000 reservations for the Model 3. People are fascinated with the company's storyline that Musk has developed by challenging automotive norms, from releasing Autopilot to developing a super-fast charging infrastructure.

Daimler will need to convince consumers it can compete as a bespoke brand without the classic diesel engine. But it's reputation as a reliable manufacturer shouldn't be overlooked. As Tesla continues to struggle to execute on production for the Model 3, buyers may be inclined to go with the more reliable Mercedes SUV down the road.

"I don't think anyone would argue that Mercedes' doesn't have world-class manufacturing prowess and Tesla is learning," Silberg said. "They have great manufacturing prowess and they’ve been in China longer and have a partner — and that’s absolutely an advantage."

SEE ALSO: Tesla just unveiled its first battery project in Puerto Rico that will restore power to a children's hospital

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The price of bitcoin has taken a big hit in the last few days, with charts suggesting the cryptocurrency is heading for a period of consolidation.

• The Senate tax plan eliminates the state and local tax deduction (SALT) which also allows people to make itemized deductions for property taxes.
• That would raise the tax burden on existing homeowners and encourage them to look for cheaper properties, according to Trulia. 
• This is likely to have the greatest impact in expensive coastal cities where residents pay some of the highest property taxes in the US. 
• Wage and job growth should continue to support the housing market regardless of changes to the tax code. 

Senate Republicans this week released a version of the Tax Cuts and Jobs Act that's different in many ways to the House bill.

One of the differences could upset homeowners in the most expensive coastal housing markets. The Senate bill eliminates the state and local tax deduction (SALT) that allows homeowners to make itemized deductions for property taxes. The House's version of the bill released earlier kept property tax deductions up to $10,000. 

"Removing the SALT deduction would incentivize both homebuyers and homeowners to look for less expensive properties since property taxes are an ongoing financial liability for owners," said Ralph McLaughlin, the chief economist at Trulia.

"Like capping SALT deductions at $10,000 in the House plan, removing all SALT deductions would have the largest potential impact in markets where property taxes are high, either because home values are pricey or because property tax rates are. These markets are concentrated in high tax rate Northeastern states, such as New York, New Jersey, and Connecticut, and also pricey states such as California."

But the proposed changes are not entirely detrimental. At a national level, it would still be cheaper to buy a home than to rent, McLaughlin said.  

Also, if the Senate version prevails, the mortgage interest deduction cap would remain unchanged at loans of $1,000,000. The House has proposed cutting the cap on this deduction at $500,000. Homebuilder and realtor trade associations denounced this, arguing that reducing this tax benefit would weaken home prices. 

The Senate version is a "positive development," the National Association of Homebuilders said in a statement Friday, even as it remained opposed to the House bill.

"Though the Senate bill provides meaningful tax relief for small businesses and keeps the complete Low-Income Housing Tax Credit program in place, we still believe that maintaining an effective homeownership tax benefit is vitally important," said Granger MacDonald, the NAHB's chairman. 

McLaughlin cautioned that concerns about the tax bill's impact on the housing market may be overblown. 

"We don’t expect the impacts in these markets to be devastating because the fundamental financial benefits of buying a house compared to renting one doesn’t change enough to make renting a better option," he said. That's partly because existing homeowners may be reluctant to buy better houses if the tax incentives aren't as attractive under the new legislation. That would keep the houses available for sale low, and support prices.   

"We expect the fundamentally strong economic forces of job growth and wage growth to continue to support the housing market through these changes if they are passed," McLaughlin concluded. 

SEE ALSO: Manhattan landlords are offering tons of freebies — and it's still not enough

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• By multiple measures, US equity valuations are close to the highest on record.
• Investor and former professor John Hussman doesn't think this is a sustainable situation, and forecasts that stocks will see negative returns over a 12-year period.
• Hussman's perma-bearish views have seen mixed success in the past, and a good number of Wall Street strategists are bullish on US stocks through 2018.

As the equity bull market has climbed into rarefied air, investors have continuously come up with new ways to rationalize the rally.

Right now, they like to cite earnings growth, which has expanded for several quarters after a prolonged rough patch. They also frequently mention interest rates that, despite hawkish signals from central banks, have remained low, supplying the market with a seemingly endless supply of cheap money.

On the other side of the spectrum, John Hussman, the president of the Hussman Investment Trust and a former economics professor, thinks that the investment community is unwisely ignoring the most stretched valuations in history on the heels of a nearly 300% bull market run. Ever the outspoken bear, Hussman says investors are being willfully ignorant, which has stocks at risk of a drop that could reach 63% and send the market spiraling into a full decade of negative returns.

It wouldn't be the first time in history this has happened. But Hussman thinks this crash will be different, because the reasons for market instability are "purely psychological" this time around, according to a recent blog post.

'US equity market valuations are at the most offensive levels in history'

At the root of Hussman's pessimistic market view are stock valuations that look historically stretched by a handful of measures. According to his preferred valuation metric — the ratio of non-financial market cap to corporate gross value-added (Market Cap/GVA) — stocks are more expensive than they were in 1929 and 2000, periods that immediately preceded major market selloffs.

"US equity market valuations at the most offensive levels in history," he wrote in his November monthly note. "We expect that more extreme valuations will only be met by more severe losses."

Those losses won't just include the 63% plunge referenced above — it'll also be accompanied by a longer 10 to 12 year period over which the S&P 500 will fall, says Hussman. He cites the chart below, which shows how closely 12-year expected returns for the benchmark have historically tracked Market Cap/GVA, which is shown in inverted fashion. Note that the expected trajectory for Market Cap/GVA shows the S&P 500 veering into negative territory.

The psychology behind the market's willingness to accept lofty stock valuations stems from the flawed rationale that prices are justified by low interest rates, says Hussman. To him, the US economy is growing too slowly for this to be true, and that any belief to the contrary gives people false confidence.

Investor minds are also being warped by their lengthy and ongoing experience with rock-bottom interest rates, according to Hussman. This has fed the belief that only risky assets can generate desirable returns, and that they should be purchased regardless of price.

"Unfortunately, valuation extremes and speculative moods are always impermanent," he wrote. "It’s that failure to distinguish temporary returns from durable ones that will likely end with most investors surrendering every bit of return they’ve enjoyed since 2000."

The life of a perma-bear

It must be noted, however, that Hussman has been sounding the alarm on a major stock market selloff for years now. Throughout the second half of 2014, he issued regular warnings about a crash, even going as far as to say stocks were crashing in October 2014. The S&P 500 has rallied another 30% since then.

Hussman's view also stands in stark contrast to many experts across Wall Street — most notably the equity strategists responsible for each firm's S&P 500 forecasts. They forecast that the benchmark will be little changed from current levels into year-end, according to data compiled by Bloomberg.

Looking ahead to 2018, UBS sees the S&P 500 climbing as much as 9% over the course of the year. Meanwhile, Goldman Sachs thinks US stocks will be kept afloat by speculation and progress around tax reform.

Still, Hussman isn't alone in the perma-bear camp. He has company in the form of Societe Generale investment strategist Albert Edwards, who also sees a stock market crash lurking around the corner.

In a recent note to clients, Edwards identified the self-described "nightmare scenario" for what could cause a massive stock blowout. He said that it could ultimately involve the Federal Reserve raising rates too slowly, combined with a sharp uptick in wage inflation.

What's interesting about the bearish arguments presented by both Edwards and Hussman is that there's no firm timetable attached to either prediction. In fact, Hussman actually acknowledges that he's neutral in the near term, because while conditions are ripe for a crash, people are going to keep buying until the bitter end.

“It’s enough to be neutral here," said Hussman. "With that, further speculation in a wickedly overextended market may not help us much, but it shouldn’t hurt us much either. In the meantime, my honest opinion is that Wall Street has gone completely mad."

SEE ALSO: A record number of Americans are taking vacations — and that highlights one of the biggest risks to markets

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"BITCOIN CASH IS BITCOIN NOW." Issued by Li Ang, head of China-based bitcoin mining outfit Canoe Pool, the proclamation may not be distinguishable from typical cryptocurrency banter. However, the difference this time around is the context. No idle statement, Ang's comment comes amid what can only be characterized as one of the biggest migrations of […]