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The Subprime 2.0 story is now gaining traction in the financial media.

By way of brief review, here is the template for Subprime 1.0 (the mortgage meltdown).

1)   Banks, hungry for profits, began issuing mortgages to sub-prime borrowers (people who couldn’t possibly pay the loans back).

2)   Housing prices and sales began to fall.

3)   Subprime borrowers began defaulting on their mortgage.

4)   Subprime mortgage lenders began to collapse.

5)   A crisis unfolds as the issue spreads throughout the banks.

Four days ago we reported that bitcoin has surged above $1,400, hitting a new lifetime high, while rising above $1,500 on certain Chinese exchanges. Since then, bitcoin's latest exponential rise has only accelerated, and moments ago the price of the cryptocurrency surged as high as $1,600 on the Coinbase exchange, rising as high as $1,655 on the troubled Bitfinex exchange.

What is prompting this relentless surge in Bitcoin?

Several things.

When we reported on the latest Tesla results last night, which showed the company losing $330 million in the quarter, or about $13,000 per car, while burning over $600 million in cash, one particular statement in Elon Musk's letter to shareholders caught our attention:

Authored by John Rubino via DollarCollapse.com,

Of all the mini-bubbles now inflating out there, maybe the least explicable is the race among emerging market companies to borrow dollars. This has gotten them – and their governments — in huge trouble so many times in the past (see the Mexican default of 1982 and the the Asian contagion of 1997) that you’d think dollar debt would be kind of a hot stove thing for Brazilians and Mexicans.

But no, they’re back at it:

Nearly five years ago, when looking at the cash and cash equivalents of Apple, which at the time was a far more "modest" $121 billion in gross cash (and virtually no debt at the time), we noted that Tim Cook's company was "the world's biggest hedge fund you have never heard of." Five years later, with more details available about its balance sheet holdings, we can conclude that in addition to the world's largest publicly traded company, Apple has now also become the world's biggest bond fund.