The leading cryptocurrency’s price is down by 20% from the all-time high it achieved a few days ago
Allocate 1% of your portfolio to Bitcoin: JPMorgan Chase
Analysts at JPMorgan Chase sent a note to their clients, advising them to invest 1% of their portfolio in Bitcoin. According to the analysts, investing in Bitcoin will hedge against fluctuations in traditional assets like stocks, bonds and commodities.
Joyce Chang and Amy Ho told their clients that allocating 1% of their investment in Bitcoin will help them achieve efficiency gain in their portfolio’s overall risk-adjusted returns. The investment bank was previously against Bitcoin and other cryptocurrencies but has changed its tone in recent years. The massive gains recorded by Bitcoin over the past 12 months convinced numerous financial institutions to consider the cryptocurrency as a hedge against inflation. To track your funds’ performance on top of multiple websites might be a pain in the neck unless you use crypto portfolio trackers. To learn more, visit TradeSanta blog.
Bitcoin price down 20% from all-time high
Bitcoin experienced a turbulent week as the price was highly volatile. During the weekend, Bitcoin set a new all-time high price above $58,000. However, the cryptocurrency experienced a massive sell-off that saw the price drop below the $45,000 mark for the first time since the all-time high price was achieved on 21 February.
The price rebounded to trade above $50,000 for a few days but declined again over the past 24 hours. At the time of this report, Bitcoin price is down by 8% over the past 24 hours and is trading just above $46,000 on cryptocurrency exchanges.
The massive sell-off came despite companies like MicroStrategy and Square spending huge amounts of money to buy the cryptocurrency. JPMorgan analysts also advised its clients to allocate some of their funds to the cryptocurrency.
Bitcoin isn’t the only cryptocurrency trading in the red after hitting a new all-time high. Ether (ETH), the second most valuable crypto, surpassed the $2,000 mark for the first time last week but has lost more than 20% of its value and is currently trading close to $1,500.
Binance Coin (BNB), Polkadot (DOT), XRP, Litecoin (LTC), Chainlink (LINK) and Bitcoin Cash (BCH) are all trading in the red zone. Cardano (ADA) is the only cryptocurrency in the top ten recording profits at the moment.
South Korea’s crypto taxation is coming next year
The South Korean government plans to tax cryptocurrency profits from next year. According to a report by The Korea Herald earlier this week, the South Korean Ministry of Economy and Finance will tax profits over 2.5 million won ($2,250) made from crypto trading. This taxation model will take effect next year, and investors will be required to pay a 20% tax on any profits made above the stipulated amount.
The South Korean government has rolled out several regulations to control cryptocurrency activities in the country and reduce fraud. The number of crypto traders and investors in South Korea went up last year, with crypto exchanges like Bithumb recording a massive increase in new registrations.
US Federal Reserve working on the Digital Dollar
Central bank digital currencies (CBDC) are gaining popularity globally, and the United States will not be left behind. This week, the US Federal Reserve chairman Jerome Powell told the US House Committee on Financial Services and the Senate that the central bank would engage the public and lawmakers on the Digital Dollar issue this year.
According to Powell, there are two aspects to the digital dollar: the technical and policy aspects. The Federal Reserve is working on the technical aspect and intends to engage the general public and the lawmakers on the policy aspect this year.
The United States is paying more attention to the cryptocurrency space. Securities and Exchange (SEC) Commissioner, Hester Peirce, advocated regulating the decentralised finance (DeFi) space. She argued that a regulated DeFi space would even the playing field between centralised and decentralised finance. Peirce believes decentralised finance is superior in technological resilience, ease of access, democracy and transaction speed.
Square and MicroStrategy buy more bitcoins
Leading companies continued their spending spree on Bitcoin this week. Square, Jack Dorsey’s payment company, bought over 3,000 bitcoins worth $170 million.
This latest development came as the company reported massive earnings from cryptocurrency-related activities in 2020. According to Square’s earnings report, it experienced a massive surge (785%) in Bitcoin revenue year-over-year.
MicroStrategy is one of the most prominent players in crypto, and the company solidified its position this week. The company turned a veritable mountain of zero-interest debt into massive Bitcoin allocation. MicroStrategy bought bitcoins worth over $1 billion earlier this week, making it one of the companies with the highest Bitcoin holdings (90,531 BTC).
Coinbase’s S-1 Form now live ahead of its stock market listing
Coinbase is the latest cryptocurrency company planning to list its shares on the stock market. The crypto exchange’s S-1 Form is now live and available to the public.
The S-1 Form reveals critical details of the company’s finances ahead of the stock market listing. The form was published by the US SEC, paving the way for the cryptocurrency exchange to list its shares directly on NASDAQ.
Coinbase also published its prospectus earlier this week, revealing some of its business risks. According to the prospectus, some unique business risks the company faces include competition from decentralised finance (DeFi) and the potential discovery of Satoshi Nakamoto’s identity.
The identity of Bitcoin’s pseudonymous creator, Satoshi Nakamoto, is still unknown despite the cryptocurrency being around for 12 years. Coinbase feels the identification of Satoshi Nakamoto or the transfer of Satoshi’s bitcoins could affect its business.