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Crypto Market has gained more than 1300% this year

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Cryptocurrencies

Total value of Crypto currency market has surged more than 1300% this year, 2017 has been a landmark year for entire cryptocurrency market as total market cap of crypto currencies which started the year at valuation of $17.7 billion has now reached the level of $280 billion, which makes gain for this year around 1300%, which is staggering return over investment. There are many reasons behind this massive rally in Crypto markets.

Many analysts cited growing visibility as a major reason that the digital currency market has been rising in value.

This increasing visibility is illustrated by Google Trends data, which shows that search interest in the term “Bitcoin” reached an all-time high on November 12. The buzz and hype in the market is increasing traffic as more of the public seeks to understand this market and wants to know about the possible sources to gather information about latest developments in the market. The digital currency market has drawn some very robust inflows this year, and this in turn has been reflected in the total market cap of these assets. Several analysts noted that a rising number of institutional investors have been getting involved with cryptocurrencies.

Retails vs Institutional Investors in Crypto Market

There are currently 2 types of investors in the Crypto market, Retail investors and Institutional investors, as far as retail market is concerned, retail investors from China, Korea, Japan drove the Crypto Market in first part of this year, but real deal came from institutional investors in second half of this year, still counting though, Institutional investors came from United States, according to the latest data, more than 100 Hedge Funds in US alone are focusing solely Crypto Currencies.

ICO’s

The rising number of Initial Coin Offerings (ICOs) has caused the digital currency market to gain value, doing so in two separate ways.

First of all, these sales create new value for the cryptocurrency market, as tokens are sold and given monetary value. Second, participating in ICOs involves exchanging Bitcoin and Ether for newly created digital tokens, which in turn provides significant headwinds for these major cryptocurrencies.

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Australian Taxation Office warned against crypto retirement funds

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Regulatory authorities around the world have tighten the grip on crypto projects. Taxation authorities like Internal Revenue Service (IRS) and Australian Taxation Office (ATO) are the latest to join the list with strong initiatives.

Australian Taxation Office recently sent warning letters to the investors who have invested a large part of their retirement savings in crypto related funds. ATO sent these letters in order to warn investors against high risk investments like crypto. One of the key responsibilities of regulatory authorities and taxation authorities is to keep investors away from high risk investment schemes.

A spokesman from ATO told local media that “We have already seen instances in 2018 where investors lost significant amount of their retirement fund in crypto investments, so it’s our duty to make them aware about the kind of risk crypto market posses”. The spokesman further explained that they are also against the huge exposure in any single asset class. “We are not saying that we are all and all against the crypto market or crypto assets, but we are more concerned about the kind of exposure these crypto retirement funds have in single crypto asset like Bitcoin”

“If an investor is putting more than 90% of his retirement savings in crypto then obviously it is at high risk and that’s what we discourage, we have no issues in diversified portfolios but if crypto retirement funds are having 100% exposure in crypto assets then we have to warn investors about the potential losses.

Self-Managed-Super Funds (SMSFs)

SMSFs are type of retirement accounts privately managed by individuals rather than the institutions or regulated financial companies. Australian Securities and Investments Commission also supports ATO’s decision, in a recent statement ASIC said

“Be wary of services offering to establish an SMSF for you in order to gain exposure to cryptocurrencies. Not only does operating an SMSF involve significant time, skills and responsibility, you may also be putting your retirement savings at risk”

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Morning Crypto Roundup: Coinbase, Bakkt, Binance in news

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“Coinbase seeing $200-400 million in new crypto deposits every week”: Armstrong 

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CEO of Coinbase, Brian Armstrong says that “Adoption of crypto by Institutions is no more an uncertainty. The question was valid about 12 months ago, but now everything has changed as we’re seeing $200-400 million a week in new crypto deposits from institutional clients”

In a recent tweet, Armstrong further says that trust and safety means a lot to crypto investors and Coinbase is on a mission to provide safe infrastructure to institutional clients in order to increase adoption.

Coinbase has completed acquisition of Xapo which helped them in institutional business. In a recent blogpost, Coinbase further mentioned that in just one year of launch, Coinbase custody has reached a staggering number of $7 billion of assets under custody, stored on behalf of 120 clients from 14 different countries.

The highlight of today’s tweet from Brian Armstrong was the numbers from Institutional investors. Safety have always been a big issue for investors and that’s why there were lot of discussions regarding adoption of crypto at Institutional level, but with $200 – 400 million coming into Coinbase every week, we can easily say that crypto adoption at institutional level is no more a question, it’s a reality.

The way forward 

We already discussed about the importance of safety of funds in crypto market, but in order to increase adoption, crypto market must create new traders. Traders love leverage, borrowing and lending which allows them to trade the market even with limited resources. Retail forex market is a prime example of such facilities. Coinbase did mentioned in the blogpost that they are excited to explore new ways to monetize and leverage crypto assets like borrowing and lending.

Bitcoin ETF

Decision about the Bitcoin ETF by securities and exchange commission is pending in October. Exchange traded fund approval from SEC can open new doors for crypto adoption at an institutional level.

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