After yet another day of heated debate in Congress, Americans are awaiting confirmation of their second stimulus checks by Monday.
According to reports, both Democrat and Republican parties are now in agreement – the new relief package will include another one-time stimulus check of $1,200 per person (and $500 per dependent) for all individuals earning $75,000 or less. There have been other accounts that indicate the income requirement could be as low as $40,000, however.
As unemployment remains at over 11% and many of the states are considering rolling back their reopening plans, most of us are looking forward to this welcome relief. Although many recipients will rush to deposit their checks into savings for a rainy day, here are the reasons why you should consider investing your $1,200 into Bitcoin instead.
Coinbase: Bitcoin USD price chart. Time Stamp – 11:25PM EST, July 23, 2020.
Coinbase
Inflation
The Federal Reserve’s balance sheet has increased by approximately $3 trillion since the start of the pandemic in March, or 14.3% of the 2019 GDP. We are likely to see an increase of $2 to $5 trillion more before the end of 2020. Although the U.S. has the privileged position of supplying the ‘world’s reserve currency’ making the U.S. Dollar in high demand during the pandemic, inflation is likely to catch up in the next 2-3 years, making your $1200 world less than before. Bitcoin, however, is a non-inflationary asset, with a finite amount of 21 million units, that has increased in price and adoption since its creation in 2009.
Hedge Against Wall Street
Wall Street is experiencing an unprecedented and unexpected boom during a crisis, decoupling from the Main Street economy. The value of the American stock market today is approximately $35 trillion, while the U.S. GDP has decreased to below $21 trillion. Many argue that this is the perfect recipe for a crash. Bitcoin provides a hedge against traditional markets as an uncorrelated asset.
Price Appreciation
Born on January 3rd, 2009, Bitcoin has steadily appreciated in price. An investment in bitcoin five years ago, yielded a 3300%+ return. While investing in the beginning of 2020, would yield a 38% return to date. Although Bitcoin can be volatile and is considered a risky investment (do your own research!), it has outperformed many of the traditional assets in the long term.
Institutional Investors Are Doing It
Once a fringe asset no one really understood, some of the biggest hedge funds and family offices globally are now investing in bitcoin. Established university endowments like Harvard, and billionaire hedge fund manager Paul Tudor Jones, have are buying bitcoin to diversify their portfolios.
“At the end of the day, the best profit maximizing strategy is to own the fastest horse. Just own the best performer and not get wed to an intellectual side that might leave you weeping the performance dust because you thought you were smarter than the market. If I am forced to forecast, my best is it will Bitcoin.”
– Paul Tudor Jones, Tudor Investment Corporation (Source: Investment Outlook – May 2020.)
Be Your Own Bank
Bank corruption has become a concern yet again as a result of the currency crisis in Lebanon. Although more prevalent in developing countries, the financial crisis of 2008 has taught us that even American financial institutions are not immune to failure. Holding some of your wealth in bitcoin allows you to maintain custody over your own funds, and makes it easy to travel with your wealth across borders.
In many countries, wealth can be confiscated by banks and governments with little to no warning. With bitcoin, all you need is your 12-word seed phrase to access your wallet. As long as you don’t share your phrase or your digital keys with anyone, your bitcoin can’t be taken away from you.
Bitcoin is Digital Gold
Many have compared bitcoin to gold, only digital, finite and easy to transfer. Gold has historically provided a stable store of value, maintaining its purchasing power over hundreds of years. But gold is difficult to buy and store. Bitcoin can also be used as a universal store of value, and can be accessed anywhere with a phone and a Wi-Fi connection.
Bitcoin Is Becoming Easier to Use
One of the criticisms of bitcoin is that it is not practical to use for smaller transactions due to high fees. This shouldn’t be a concern if you view bitcoin as a long-term investment. If, however, you want to spend your bitcoin, there are new technologies such as the Lightning Network which allow you to do so. Check out this surf town in El Salvador that built an entire economy on Bitcoin.
Bitcoin is also easy to send to others. Have family abroad? Companies like Western Union can take 5-10% of the international transfer, while the recipient may have to travel out of the way to receive the funds. Bitcoin allows you to send funds easy and quickly from your phone to theirs.
Proponents argue that bitcoin is the next generation of money and is the foundation of our future economy. If that prediction is true, why not get in on the ground floor?
Disclaimer: This article is not meant to serve as investment advice and is for informational purposes only. Please do your own research before making any investments in the cryptocurrency space.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
