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.
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.