Crypto update: How has Bitcoin performed in the past month?
With the stock market in a chaotic state, another part of the investing world is having slightly better luck — the crypto market.
What’s the big deal? In the past month, the S&P 500 is down 3.6%, the NASDAQ is down 5.7%, while Bitcoin is up 5.3% — but it wasn’t exactly a smooth ride up.
Bitcoin was initially down 24% before last week on news of:
- China banning all cryptocurrency trading and mining.
- The US stepping up regulations on certain crypto products like crypto lending and stable coins.
- The US planning to close a tax loophole on crypto that offsets taxes.
But US regulations are not necessarily a ban on crypto. Instead, rules would be in place to protect investors from financial risk and fraud.
In the past week, comments from US officials, with a stance different from China’s, sent Bitcoin up 30%:
- Fed Chair, Jerome Powell, said he has “no intention” of banning cryptocurrencies.
- The Securities and Exchange Commission’s Chairman said on Tuesday the US won’t ban cryptocurrencies.
Monkeys throwing darts: Despite the clarity on US regulator’s position towards Crypto, Bitcoin’s future is still highly uncertain with price targets scattered:
- Bulls: Cathie Wood of Ark Invest, expects Bitcoin to be worth $500k in five years — suggesting a 60/40% portfolio split in Bitcoin and Ethereum.
- Bears: CIO of Guggenheim Partners expected Bitcoin to fall back to $10k while highly followed Mr. Whale predicted Bitcoin to fall well below $10k.
Beyond stocks: With the stock market looking overvalued based on the CAPE ratio, investors looking for diversification in the crypto market might not find what they’re looking for.
Crypto still hasn’t proven itself to be a good diversification away from stocks — with both assets moving similarly in the past two major market crashes. In the past few months, their correlation has only gotten stronger.