The seemingly unstoppable rise of bitcoin continued Tuesday with the cost of a single unit of the digital currency rising above $50,000 US for the first time.
The same bitcoin just one year ago would have cost you $10,000 US. The price is up almost 200 per cent in the last three months alone.
Bitcoin is rallying as more companies signal the volatile digital currency could eventually gain widespread acceptance as a means of payment. The vast majority of those who have acquired bitcoin have treated it as a commodity, like gold, with few places accepting it in exchange for goods or services.
Companies have been leery because of bitcoin’s volatility and its use by parties who want to avoid the traditional banking system for a myriad of reasons.
Last Monday, however, the electric car company Tesla sent a tremor through the digital currency markets, saying that it was buying $1.5 billion US in bitcoin as part of a new investment strategy, and that it would soon be accepting bitcoin in exchange for its cars.
Then Blue Ridge Bank of Charlottesville, Va., said that it would become the first commercial bank to provide access to bitcoin at its branches. The regional bank said Wednesday that cardholders can purchase and redeem bitcoin at 19 of its ATMs. BNY Mellon, the oldest bank in the U.S., followed a day later, saying it would include digital currencies in the services it provides to clients.
‘Not going to happen overnight’
While most expect a slow evolution toward widespread usage of bitcoins as currency, Richard Lyons, a finance professor at the University of California at Berkeley, says it’s inevitable. Lyons predicts bitcoin and other digital currencies “will become transactional currencies increasingly over the next five years. It’s not going to happen overnight,” he said.
Lee Reiners, who teaches fintech and cryptocurrency courses at Duke University School of Law, said BNY Mellon’s move makes sense because “there are now numerous high-net-worth individuals and investment funds embracing crypto as an asset class to be added to their portfolio.”
But Reiners believes companies will remain hesitant to accept bitcoin for payment because of its volatility.
“If you were a merchant, why would you accept payment in an asset that could be worth 20 per cent less a day after you receive it?” Reiners said in an email.
Investors will have to grapple with that volatility as well. The price of bitcoin has soared and dipped since its debut on the futures market in 2017. Those fluctuations, analysts warn, could wreak havoc on a company’s bottom line and deter investors.
Tesla warns of volatility
Assuming Tesla bought bitcoin at the volume weighted average price of $34,445 US in January, the company is sitting on a gain of about 38 per cent with its investment. But in the regulatory announcement unveiling the investment, Tesla warned about the volatility of bitcoin, its reliance on technology for use and lack of a centralized issuer, such as a government.
“While we intend to take all reasonable measures to secure any digital assets, if such threats are realized or the measures or controls we create or implement to secure our digital assets fail, it could result in a partial or total misappropriation or loss of our digital assets, and our financial condition and operating results may be harmed,” Tesla said in the filing.
“Tesla is going to have to be very careful and comprehensive in accounting for its bitcoin investment on its books,” said Anthony Michael Sabino, a professor of law, at St. John’s University. “Like any other financial asset other than actual cash, it might fluctuate.”
Canadian ETF market
Bitcoin-based exchange traded funds are getting the go-ahead from Canadian regulators, creating a path for a fund structure that investment managers say is unique in the industry.
Toronto-based Purpose Investments says its bitcoin ETF will likely start trading this week under the symbol “BTCC,” after the fund worked with regulators to make sure it could create something that follows the rules for both the ETF market and the digital asset industry.
An Ontario Securities Commission spokesperson says the regulator finished reviewing Purpose Investments’ final plan to offer securities last Thursday and gave the fund a receipt that makes it a reporting issuer in Ontario.
After Purpose Investments announced the milestone, another Canadian fund, 3iQ, said it also received preliminary receipts for a bitcoin ETF in all of the Canadian provinces and territories except for Quebec.
Both funds claim to be “physical” bitcoin ETFs, setting them apart from some of the other cryptocurrency investments out there, such as the bitcoin futures that trade on the Chicago Mercantile Exchange.
‘Physical,’ not derivative
Purpose Investments Chief Investment Officer Greg Taylor says the fund is different from a derivative or futures contract, as Purpose Investments will buy bitcoin every time someone puts money into the ETF.
Taylor says Purpose Investments will also store the bitcoin codes themselves — not on the internet — using a process called “cold storage.” OSC has described cold storage as “a computer with no access to a network” that is less vulnerable to hacking.
Purpose Investments says the end result of these bitcoin ETFs is that investors will hold actual bitcoin in their portfolios but can buy and sell it similarly to buying or selling a stock.
“The risk is for traditional investors that you have to open up a trading account to buy bitcoin and you’re in self-custody — meaning you’re going to get the code and password for that coin. And you’re responsible for doing that,” said Taylor. “With the ETF structure, it’s going to be easier as we’ll do that with our custodian.”
CIBC Mellon is working as a fund administrator for Purpose Investments’ bitcoin ETF, as the firm looks for ways to meet rising demand for cryptocurrencies.
Ronald Landry, who runs Canadian ETF services for CIBC Mellon, says it is working on getting more cryptocurrency services up and running in Canada.
3iQ chief executive Fred Pye says a physical bitcoin ETF is the natural progression from its other investment vehicles, which include a publicly listed bitcoin investment fund and a fund based on the cryptocurrency Ether.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
