A Wild Roller Coaster Weekend for Bitcoin

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The previous week’s trading session ended on a high note for Bitcoin, having surged past the $40,000 price point and helped the entire cryptocurrency industry reach a market capitalization of over $1 trillion. 

In fact, Bitcoin came VERY close to $42,000 on Friday morning. Along with it came Ethereum, which started heading closer and closer towards an all-time high of $1,300. The number of google searches for “Ethereum” is at a record high, as people have finally realized it’s a good idea to have DIVERSITY within your cryptocurrency portfolio. 

We’re only into 2021 and Ethereum is up 70%. Absolutely insane to think how the first 10 days of 2021 have managed to take us this far, even with the political sphere of the United States headed towards an imminent collapse. 

It was by far the best week for cryptocurrencies since late 2017, going up by a collective total of 50%. 

All was well until Sunday afternoon, where Bitcoin dipped to as low as ~$34,500 before gradually climbing back up to $38,300. Ethereum was also down by $200, plunging back to $1,150. Not to mention that the largest cryptocurrency exchange in the world – Coinbase – had to go offline for the second time in a 3-day period. 

So as of this writing, here is where we stand with Bitcoin and Ethereum (8:30am UTC)…

  • Bitcoin = $35,254
  • Ethereum = $1,100

With all of this in mind, where do we go next with cryptocurrencies when it comes to our investment decisions? 

According to Coindesk.com, it’s too early to say whether cryptocurrencies are in the middle of a bubble right now…

“Everyone knows that all bubbles pop when a needle appears on the scene. It’s hard to imagine anything as messy and noisy as an insurrection being compared to something as small and sharp as a needle, so let’s mix metaphors and go with the sudden appearance of a ‘bump in the road.’

But that didn’t happen – the main US stock markets continued to go up, and call options saw their fourth highest volume day on record. So, either traditional US markets are not in a bubble, or we have not yet had that bump.”

Yet on the other hand, we have Bank of America and other institutions claiming we are in the “mother of all bubbles”…

“…the dramatic rise in bitcoin during the past two years – a surge of roughly 1,000% since the beginning of 2019 – is far greater than the gains for other assets that have enjoyed massive run-ups in the past few decades.

That includes a surge in gold prices of more than 400% in the late 1970s, as well as other notable investing manias: Japanese stocks in the late 1980s, Thailand’s stock market in the mid-1990s, dot-coms in the late 1990s and housing prices in the mid-2000s. Those sectors all enjoyed triple-digit percentage gains before crashing down to earth.”

Which leaves me with the question I have for you:

What are YOU doing to do with cryptocurrencies in your portfolio? Sell your position, buy and hold more, or treat them like a day-trading vehicle? Reply to this newsletter and let us know what you’re going to do!

Alright Crypto Millionaires, It’s Time to Tax Your Bitcoin!

So… let’s say you were one of the lucky few who started buying and holding Bitcoin early in 2020, especially as the COVID-19 pandemic started. You probably made some sweet gains in the market, but now Uncle Sam has come to collect his fix. 

So what do you need to know about Bitcoin and paying taxes? Well, it all depends on how you used it…

As The Motley Fool points out, the duration with which you held on to Bitcoin determines how it gets taxed:

If you owned an asset for a year or less, a profitable sale will result in a short-term capital gain, and will be taxed just like ordinary income.

If you owned an asset for more than a year, a profitable sale will result in a long-term capital gain, which has generally lower tax rates.”

And yes, the rules are somewhat different for people who are using Bitcoin as a currency despite its classification as “property”:

“Let’s say that you bought $100 worth of bitcoin and its value rose to $300 over the next year. If you use your bitcoin to buy an airline ticket that would sell for $300, you have a $200 taxable gain on the purchase. Conversely, if you spend bitcoin that you paid more for, you could have a loss for tax purposes.”

Keep all of this in mind when you’re filling your 1040 forms for 2020 – it might help you save a few extra dollars and a possible (unwanted) visit from the IRS!

Don’t Buy (or Use) a Budgeting App Unless It Has THESE Five Things…

Gone are the old-fashioned days when our finances were recorded using a spreadsheet, or even pen and paper. 

The cool kids on the block are using digital apps to manage all of their incoming and outgoing capital – monthly earnings/spendings, investment portfolio growth, tracking progress made towards retirement/savings goals, and so on. 

However, the good folks at CNBC have a list of FIVE crucial features that should be a part of your app, whether it is free or paid for…

“Free to Try” Trial: Imaginebuying a car without taking it for a single test drive to see how it handles and “feels.” You’d be taking a huge gamble in spending tens of thousands of dollars on hour on your purchase! The same mindset should be considered when getting ready to fork over money for a paid app, let alone a subscription-based service. 

Full Customization of Your Spending Categories: Everybody is different and has different needs. Sure, we have the standard categories in common (rent, transportation, utilities, groceries, etc.), but we also need the ability to create categories that are unique for our own spending situations. 

Ability to Connect Your Credit Cards and Bank Accounts: This feature is 100% optional, as you would have to give your banks/institutions permission to link your accounts to a budgeting app. As long as you’re ok with that, all of your transactions can be automatically logged and categorized. If not, you’ll have to get used to entering transactions manually. 

Access Across Numerous Platforms/Devices: For instance, if you’re an Apple kind of person, you would ideally want the app to be available on desktop/browser AND your mobile phone. 

Transparency Around Security: This is YOUR financial data, and information of this kind can be easily used against you if placed in the wrong hands. You have every right to know all the ways in which your app is keeping your data secure. 

Something to think about for anybody who is new to the personal finance app game!

In Dubai, Rich People Can Get the COVID-19 Vaccine and “Skip The Line”

Once again, the pandemic is starting to reveal the full extent to which money allows you to experience unlimited freedom as the rest of the world is shut down. One of the privileges you get is being able to get the COVID-19 vaccine ahead of everyone else. From Bloomberg:

“Super-rich and high-profile Britons are increasingly opting to travel abroad to get a private vaccine against the coronavirus.

Bookings for jabs in the United Arab Emirates, combined with beach breaks between the two doses of the vaccine, are becoming popular with private concierge service Knightsbridge Circle, which charges 25,000 pounds ($33,900) a year and lists royals, celebrities and business executives among its clients.

The option allows the super-wealthy to get earlier inoculation as Britain currently only offers vaccines to people aged 80 and over, people who live or work in care homes, and health and social care workers at high risk.”

And to get around the nifty issue of travel bans, these rich Brits can use the loophole of “going on a business trip” to bypass the current rules. 

I’m curious to know: Do YOU think this is acceptable? Should people be allowed to go over the rules that the rest of the world has to follow in order to get vaccinated for COVID-19? Reply to this newsletter and tell us how you feel?

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