Investment

Believe it or not, bitcoin has become a good long-term investment – CNN

Published

4 years ago

January 24, 2021

Until recently, as an investment, bitcoin has had unique and pronounced risks, but that’s changing, with new rules and regulations that have spurred wider institutional adoption.

Throughout its 12-year history, the world’s most valuable cryptocurrency has faced extreme volatility, with prices rising and falling as much as 10% on any given day — reaching an all-time high of more than $41,000 earlier this month. Beyond wild price swings, bitcoin also has structural issues that most asset classes don’t have to consider, like lost or stolen password keys, which can wipe out someone’s entire investment.

Fortunately, bitcoin’s rapid growth has caused government and institutions to step in and address many of the risks associated with the digital currency, with the US Office of Comptroller of Currency authorizing banks and custodians to provide cryptocurrency services, which eliminate these types of problems.

In short, bitcoin has matured — though it’s still in an early adoption phase — and now offers significant long-term value.

Since the onset of Covid-19, the federal government has allocated nearly $4.5 trillion in spending for direct payments to individuals, enhanced unemployment, small business loans and other types of financial supports — with more likely to come, as detailed in President Biden’s proposed $1.9 trillion relief package. Though deficit spending is necessary for the long-term health of the economy, it also poses potential for inflation. In the past four years alone, the national debt rose about $7.6 trillion to $27 trillion.

To hedge against this type of volatility, many investors are scooping up bitcoin, which, because of its very nature, is impervious to inflation. There can ever only be 21 million bitcoins in existence, due to a stipulation in its source code. By the law of supply and demand, that makes bitcoin a limited — and in-demand — asset.

At the same time, increased regulations, improved infrastructure and access to financial institutions — like Fidelity — that hold investors’ money have made bitcoin investments as safe as owning bonds and commodities like gold, which are also used to balance portfolios.

When gold rallied from 2001 to 2011, it was largely because the era of tight monetary policy had come to an end due to the Fed reducing the funds rate targets. In 2012, the value of gold fell when fears of inflation receded and the stock market soared.

You might then ask: If bitcoin is volatile, how can it also guard against volatility? Though bitcoin has experienced dramatic price shifts over the years, much of that movement can be attributed to the newness of the asset class and lack of regulation. Today, that’s changing with recently enacted regulations coupled with the entrance of large players, including macro funds, large hedge funds and life insurance companies, no doubt drawn to the more stable environment. While price fluctuations aren’t going to go away entirely, we view bitcoin as a long-term value proposition that should only grow over time.

With major institutions now bullish on bitcoin, investors may have a different worry — that they’ve effectively missed the boat. But history proves otherwise. Amazon is one of the most valuable companies in the world. In each of Amazon’s first 12 years, the stock’s high price was, on average, more than double its open price. But investing in Amazon over the last 12 years has remained highly profitable.

When investing in an emerging asset class, there is always an inflection point — a moment where there is enough of an infrastructure to allow for wider adoption while still leaving room for appreciation. We believe that we’re at that moment with bitcoin.

The strongest indicator of bitcoin’s value is the sheer size of its market capitalization — more than $600 billion. If we were to look at that through the prism of the S&P 500, it would make bitcoin a top 10 company in the world, having gone from zero to half a trillion in just 12 years. Only a few companies, like Facebook and Tesla, have grown that fast.

When the world is spinning out of control, it’s natural to want to invest in something tangible, like gold. But bitcoin is valuable because of — not despite — it’s intangibility. You can always mine for more gold. Bitcoin is unique among assets as the first store of value in the world where supply is completely unaffected by increased demand.

Let’s block ads! (Why?)

Source link

Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

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.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

Source link

Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

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.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Source link

Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

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.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Source link