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For many, the value proposition of Bitcoin is easy to understand, especially in relation to more traditional investments. Bitcoin has a programmatically fixed supply, it exists outside of any central entity’s control and can be considered truly borderless.
But the “how” of bitcoin investment can be a little more daunting. How to take part in the bitcoin ecosystem, how to best invest your dollars into BTC, how to construct this investment so that it is most beneficial and tax advantaged in the long term — in short, how to get started is often the hardest part.
The good news is that there is an easy way to direct traditional investment toward bitcoin that many don’t know about. You can join the bitcoin revolution through a very familiar investment vehicle: your IRA.
A Traditional Investment Vehicle, Made Revolutionary
Here’s how the typical process goes with IRAs: either you or your financial advisor creates an IRA in your name, and then uses it to invest in traditional investments — such as bonds or stocks. And there’s almost no chance that those IRA dollars would ever touch cryptocurrency, meaning that BTC and other alternative assets could never benefit from the tax advantages of an IRA.
Alternative IRA custodians grant you full control to invest in alternative investments beyond the traditional stock market — you make your own decision about where and how to invest your IRA dollars.
A few years ago, the IRS classified bitcoin (and other cryptocurrencies) as property, allowing it to be included in IRAs, along with other investments (called “alternative investments”) like real estate, venture capital, private equity and shares of art.
These alternative IRA accounts, often referred to as self-directed IRAs, can be structured in the forms that many investors are used to, most commonly: traditional IRAs, Roth IRAs, and Simplified Employee Pension (SEP) IRAs. Each type of IRA offers unique advantages, and determining which one is right for you will depend on your age, income, investor profile and overall goals.
Alternative IRA accounts have the same contribution limits as the other IRAs. The contribution limit through 2020 is $6,000 for those under 50 years old, or $7,000 for those 50 years old and older.
Why You Should Invest in Bitcoin With an Alto CryptoIRA
Because of regulatory changes and advances in technology, alternative IRAs are now more powerful than ever — allowing everyday investors to place funds in alternative investments and enjoy the tax-friendly advantages of an IRA.
To simplify investing in bitcoin with your IRA, Alto has created a special IRA just for crypto enthusiasts called, fittingly enough, the Alto CryptoIRA. Here are the benefits to opening an Alto CryptoIRA:
- Freedom to choose with your retirement money. Most brokerages and custodians don’t allow investments in alternative assets with IRAs, because these assets are typically illiquid. That’s not the case with Alto. You can use IRA dollars to buy bitcoin with a CryptoIRA from Alto.
- Make tax-free bitcoin trades. Active traders, pay attention: This is a huge plus to anyone who is watching the bitcoin market closely (and who isn’t?). An Alto CryptoIRA also gives you the ability to make tax-free trades. For example, you can sell bitcoin at $10,000 without having to worry about capital gains, and then buy again when bitcoin is at $8,000.
- Gains grow tax deferred. With an Alto CryptoIRA, BTC gains come to you tax free. You won’t have to pay tax if the value of BTC increases over time. If you got in years ago when the price was $1,000 and then sold when it was $10,000, you would not have to pay taxes on the gains. In fact, you’ll never pay taxes on any of those gains or whatever you invest them in next until you start to take taxable distributions later in life.
- Ease and cost. Though it hasn’t always been this way, Alto has built a unique and easy platform to simplify investing into alternatives. They have even created a dedicated IRA just for cryptocurrency investing, no LLC required, called the Alto CryptoIRA. In addition to investing in bitcoin with an IRA, you can create additional IRAs for investing in other opportunities, including those offered by their many partners.
One thing to keep in mind: Your total IRA contribution amount spans across all of your IRA accounts. You can have multiple IRAs, but all of your contributions can only equal $6,000 for the year. You are also limited from contributing to a Roth IRA, depending on your annual income. That said, you can rollover any amount of cash from an existing IRA to Alto without being capped and without penalty.
Conclusion: The Growth of SDIRAs and Alternative Investments
Investing in alternative assets with self-directed IRAs is only gaining in popularity with leading investors. Research made exclusive to AltoIRA showed that 27 percent of those with a household income of $1 million or more are interested in alternative assets, including cryptocurrencies like bitcoin. Other industry analysts expect the market for alternative investments to hit $14 trillion by 2023.
And it’s simple to join this growing trend at an opportune time, and begin investing in this market with an Alto CryptoIRA.
Bank of Korea Head Says Cryptocurrencies Have No Intrinsic Value
The head of the Bank of Korea, Lee Ju-yeol, said that Bitcoin and other major cryptocurrencies lack intrinsic value. However, he believes that all assets will continue to experience significant price fluctuations.
Price Surge Because of Pro-BTC Institutional Investors?
The chief of the Bank of Korea said cryptocurrencies, including Bitcoin, do not possess inherent value. In a recent news report, Lee Ju-yeol blasted the highly volatile nature of the digital asset industry.
“There is no intrinsic value in crypto assets,” said BOK Gov. Lee Ju-yeol at a parliamentary session on 23 February.
The news report quoted lawmakers asking BOK’s chief if the recent surge in the price of BTC is temporary or not.
“It is very difficult to predict the price, but its price will be extremely volatile,” Ju-yeol added.
The bank executive has also said that the recent rally in Bitcoin’s price followed by other significant digital assets may be led by multiple factors. Among them, Elon Musk’s Tesla – investing $1.5 billion. He highlighted that the latest price surge might be a continuation of institutional investors using Bitcoin as a hedge.
Ju-yeol also emphasized that BOK shouldn’t buy bonds issued by the country’s government directly. Otherwise, this would raise worries about fiscal stability and undermine the central bank’s trust.
Bitcoin Volatility Bringing Some More Hard Times For Investors?
The primary cryptocurrency’s volatility has been causing quite some troubles for both retail and institutional investors. This particular character of the digital assets has been a stumbling point for many, thus, causing some hesitations in whether to allocate funds in it or not.
BTC’s price managed to initiate another notable surge during the last couple of months, marking a consequent all-time high. Just a few days ago, it skyrocketed above $58,000, dragging other altcoins like Ethereum behind it for a while.
However, almost immediately after its upgrowth, BTC suffered a significant correction, settling unsteadily around $50K as per the time of the writing. As a result, the cryptocurrency market capitalization lost more than $300 billion in two days.
Interestingly, JPMorgan strategists said recently that Bitcoin’s illiquidity could bring more problems. Analysts from the US multinational banking institution argued that BTC is in a liquidity shortage, warning investors that the primary crypto-asset could suffer another price drop.
Featured Image Courtesy of WSJ.
Cross-chain bridges and DeFi integration are pushing these 3 altcoins higher
The cryptocurrency market is showing signs of progress following a multiday sell-off that saw the total market capitalization drop by more than $400 billion as Bitcoin’s (BTC) price briefly fell below $46,000.
While the majority of altcoins have entered a consolidation phase that includes a retest of underlying support levels, several projects have started to regain lost ground after new developments reignited investors’ optimism.
Cardano’s ADA started the year with a bullish spark that saw its price increase 624% from $0.165 on Jan. 2 to a high of $1.20 on Feb. 20. This week’s sharp correction pulled the price to a swing low at $0.80, but it is clear that traders bought the dip.
Since hitting a swing low at $0.80, ADA’s price rallied 30% to $1.05 following the news that community members at Venus Protocol had approved a proposal to bring ADA to the Venus mainnet.
— Venus (@VenusProtocol) February 23, 2021
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for ADA on Feb. 14, prior to the recent price rise.
The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
As the chart above shows, Binance introduced staking on Feb 10., and the VORTECS™ score for ADA rose to a high at 88 on Feb. 14
On Feb. 9 the Matic network rebranded to become “Polygon” as part of a strategic change to become a layer-two aggregator. The move was done in response to the growing momentum of Polkadot and a desire to build an interoperability protocol on top of Ethereum.
High gas fees on the Ethereum network have increased the need for layer-two solutions, and Polygon has emerged as one of the top solutions with projects like Aavegochi and Golem already operating on the protocol.
The rebrand helped lift the price of MATIC from $0.07 on Feb. 9 to an all-time high of $0.197 on Feb. 20 before the market downturn pushed it back down to $0.111 on Feb. 23.
Since that time the MATIC has recovered 62% to trade at $0.16 as the community and total value locked on Polygon continue to grow.
Stacks (STX) was the breakout star on Feb. 24 as the layer-one blockchain solution designed to bring smart contracts and decentralized applications to Bitcoin saw a record $166 million in trading volume that elevated STX to a new all-time high of $1.17.
Excitement for the project comes after the Feb. 23 announcement that STX holders can now participate in delegated staking from the Stacks wallet, allowing them to earn BTC rewards.
According to data from Cointelegraph Markets Pro, market conditions for STX have been favorable for some time.
As seen in the chart above, the VORTECS™ score for STX hit a high of 87 on Feb. 23, around 30 hours before the price increased 75% to its new high of $1.17.
Interoperability, cross-bridge solutions and staking have emerged as drivers of growth that help incentivize investors to hold their tokens and also attract new participants to old and new blockchain projects.
Following the recent market downturn, it’s clear that projects that offer tokenholders multiple ways to earn a yield and operate across separate blockchain networks are beginning to stand out from the rest of the field.
Former London Stock Exchange Group CEO Urges UK Government to Explore Cryptocurrencies
The former CEO of the London Stock Exchange Group, Xavier Rolet, has advised the UK government to look into cryptocurrencies and SPACs to minimize the adverse impact of Brexit. In a recent report, Rolet claimed that the UK has trailed behind other countries in both aspects.
The UK Should Turn To Crypto And SPACs?
Born in France, Rolet is a businessman and the Chief Executive Officer of the London-based credit-focused asset management firm CQS. Before assuming this position, though, he served as the CEO of the London Stock Exchange Group and was named as one of the 100 best CEOs in the world in 2017 by the Harvard Business Review.
In a report cited by Bloomberg, Rolet touched upon the potential consequences to the UK economy following the withdrawal from the European Union and the European Atomic Energy Community, better known as Brexit.
The executive believes that the UK has two viable options to consider if it wants to minimize the risks and help the nation flourish.
In the first one, he urged the government to “promptly consider the SPAC revolution.” Also referred to as “blank check companies,” these special purpose acquisition companies (SPAC) operate as shell corporations listed on a stock exchange with the idea of buying out a private company, thus making it public. Ultimately, this strategy eliminates the need to go through a traditional initial public offering (IPO).
While the US has seen significant adoption in the past year with a 10x increase in the raised funds compared to 2019’s results, the UK regulators have halted their progress on the London markets.
Rolet’s second advice involved digital assets as he noted that “all relevant UK government agencies should be resourced to thoroughly understand cryptocurrencies.”
With proper regulations, the crypto ecosystem could “place London and the UK at the center of a reputable and safe financial market.”
The UK’s Regulatory Approach To Cryptocurrencies
While UK’s regulators have hindered SPACs’ progress within the country, the nation’s financial watchdog, the FCA, has also been rather harsh against the cryptocurrency industry.
As of the start of this year, the Financial Conduct Authority banned crypto derivatives and exchange-traded notes (ETNs) to retail customers.
Additionally, the watchdog has issued several warnings to investors that they could lose all their funds if allocated in digital assets.
The regulator also announced that all UK-based digital asset businesses need to be registered with it but extended the deadline for applications to July 9th, 2021.
Featured Image Courtesy of TheGuardian
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