Bitcoin is back, surging 25% since January on several pieces of positive news, including:
- KPMG Canada announcing that it is adding crypto assets Bitcoin (BTC) and Ethereum (ETH) to its corporate treasury;
- Tesla confirming that it holds close to $2 billion in BTC as part of its corporate treasury holdings, putting to rest any concerns that it would steadily ease out of the volatile crypto asset; and
- Reports that cryptos earned through ‘staking’ (where crypto assets are put to work on the blockchain in return for rewards) are not taxable in the US.
KPMG joins the crypto adoption
KPMG’s endorsement of cryptos is a surprise move, signalling the ongoing mainstreaming of crypto assets like BTC and ETH.
In a statement released on Monday (February 7), KPMG’s Canada branch said its allocation into cryptos is consistent with the growing adoption of crypto assets by hedge funds, family offices, large insurers and pension funds.
“The crypto asset industry continues to grow and mature, and it needs to be considered by financial services and institutional investors,” says Kareem Sadek, advisory partner, crypto assets and Blockchain Services co-leader at KPMG in Canada.
“We’ve invested in a strong crypto assets practice, and we will continue to enhance and build on our capabilities across decentralised finance (DeFi), non-fungible tokens (NFTs) and the Metaverse, to name a few. We expect to see a lot of growth in these areas in the years to come,” he added.
Macro outlook and interest rate hikes
Brett Hope Robertson, head of investments at crypto platform Revix, says it is too early to say if BTC is now in a recovery phase, but early indications are there.
“Crypto assets like BTC and ETH have behaved rather like the tech-heavy Nasdaq index, which dropped nearly 17% since hitting a peak in October 2021. While most investors are wary of the economic outlook and seem to have agreed on a bearish consensus, this is normally when the market has a way of going and doing the opposite.”
Consumer inflation in the US hit 7% in 2021, against an average 4.5% for South Africa – the first time in decades that SA’s inflation rate has undershot that of the US.
“The financial markets are pricing in four/five interest rate hikes in the US,” says Hope Robertson. “But when looking at previous rate hike cycles against Bitcoin, we saw that over the full term of hikes, Bitcoin actually rallied in price, instead of decreasing as most believe. This goes to show that with rate hike news out the way, we could come to see cryptocurrencies move higher throughout this hiking cycle.”
The crypto long game
Glassnode research suggests there is some reason to remain optimistic about BTC’s long-term price trend: the number of “non-zero” wallets containing some BTC has hit an all-time high above 40 million, with retail investors seemingly unfazed by the sharp downward move in prices in recent months.
There is a persistent accumulation of BTC by smaller retail investors, defined as those holding less than one BTC. Their reluctance to sell is driven in part by confidence in the long-term price projection for the crypto asset, and the ability to earn additional BTC through ‘staking’ – which removes some of the incentive to sell into market dips.
There is also evidence of retail investors moving their BTC off exchanges to cold storage, an indicator that they are planning to hold for the longer term.
Kraken Intelligence reports that the 200-week moving average remains a critical level of support for BTC. The leading cryptocurrency currently trades at 2.21 times its 200-week moving average of around $20 000. Should BTC return to its historical range of 10 to 15 times the 200-week moving average, a price of $197 900 to $296 850 is possible, says Kraken.
BTC and ETH both entered seriously oversold territory on the charts in December and January. Historically, this has been a good opportunity to enter the market in anticipation of a continuation of the bull trend. Should the price recovery continue in the coming weeks, many leveraged futures traders will see their positions liquidated, and the momentum will swing from bearish to bullish on the futures markets.
How do I know what cryptos to invest in for the long term?
Nobody knows with 100% certainty which investment will be the best over the long term, but you can use a smart trick that almost all investors use: diversification. This is the old adage of not putting all your eggs in the same basket.
Diversification accomplishes two things:
- It reduces your risk and makes your overall investment journey a less volatile ride, and
- It spreads your bets across multiple potential winners and can be considered a clever way to invest in an emerging innovative space, like cryptocurrencies, where the winner could be anyone.
Crypto bundles or diversified baskets of cryptocurrencies that either track the overall crypto market or certain sectors within the crypto space are the easiest and smartest way to gain exposure and invest in the crypto market. It’s similar to investing in an exchange-traded fund (ETF), where you get loads of low-cost diversification through a single investment product.
Revix has become a market leader in crypto bundles. Not only will you constantly hold the largest and most reputable cryptocurrencies but your bundle will also automatically rebalance every month to keep you up to date with any possible new winners entering the space. This way you never miss out on holding what could potentially be the next Amazon.
As shown above, Revix’s ‘bundle’ approach to investing in cryptocurrencies has beaten the major cryptocurrencies of each sector:
- Smart Contract Bundle (+121%) beat out Ethereum (+88%)
- Top 10 Bundle (+65%) beat out Bitcoin (+9%)
- Payments Bundle (+1%) beat out Litecoin (-16%)
This should show you how diversifying your investments can have major benefits over a longer time period.
Where can I invest in single cryptos as well as diversified bundles?
Revix is a Cape Town-based crypto investment platform backed by JSE-listed Sabvest and offers something unique to investors.
It allows you to invest in standalone cryptocurrencies – like Bitcoin, Solana, Ethereum, Uniswap, Cardano and more – or set yourself apart from the rest by investing in ready-made diversified crypto bundles that look similar to ETFs.
Revix’s crypto bundles enable you to effortlessly own an equally-weighted basket of the world’s largest and, by default, most successful cryptocurrencies without having to build and manage a crypto portfolio yourself. Revix currently offers three bundles, namely the Top 10 Bundle, the Payment Bundle and the Smart Contract Bundle.
The Top 10 Bundle is like the JSE Top 40 or S&P 500 for crypto and provides equally weighted exposure to the top 10 cryptocurrencies making up more than 75% of the crypto market.
The Payment Bundle provides equally weighted exposure to the top five payment-focused cryptocurrencies looking to make payments cheaper, faster and more global.
The Smart Contract Bundle provides equally weighted exposure to the top five smart contract-focused cryptocurrencies like Ethereum, Solana and Polkadot that enable developers to build applications on top of their blockchains, similar to how Apple builds apps on top of its OS operating system.
Revix brings simplicity, trust and great customer service to investing. Its easy-to-use online platform enables anyone to securely own the world’s top investments in just a few clicks.
Revix guides new clients through the sign-up process to their first deposit and first investment. Once set up, most customers manage their own portfolio but can access support from the Revix team at any time.
For more information, please visit www.revix.com
This article is intended for informational purposes only. The views expressed are not and should not be construed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell any of the assets or securities mentioned herein. You should not invest more than you can afford to lose, and before investing, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
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