Most Popular
Author

The Breadwinner

Browsing

Treasury Secretary Janet Yellen has issued a warning about the dangers of bitcoin for investors and non-investors.

Despite a sharp decrease in price at the start of the week, the digital asset continues to exchange hands above $53,000 as it has got help from various sources. Tesla has recently made a large purchase and announced it will accept bitcoin as payment for transactions.

But Yellen has claimed there are still important questions about its stability and legitimacy.

“I don’t believe bitcoin is very popular as a transaction mechanism,” she said to reporters. “I think it is usually used for illicit finance. It is a very inefficient way of performing transactions, and the energy it consumes when processing those transactions is incredible.”

Mining bitcoin involves having a computer solve complex mathematical equations. The total electric consumption of bitcoin leaves an annual carbon footprint equal to the nation of New Zealand, according to some reports.

Then there’s instability, as the digital asset’s price undergoes rapid rises and falls during its existence.

“It’s a highly speculative asset class and people should know it can be very volatile and I worry about the possible losses some investors might suffer,” Yellen said.

Various agencies have considered creating an alternate digital currency with the hopes that it would open the technology to more people.

The Fed has discussed the possibility of a new digital currency, along with a new payments system, which it might be announcing over the next few years.

“I believe this could result in faster and cheaper payments, which I believe are important goals,” Yellen said.

US stocks have lowered on Monday as investors stayed cautious about a large stimulus, combined with increasing commodity prices and rising bond yields possibly triggering a rise in inflation, just as the economy is starting to make a comeback from the pandemic. 

The 10-year US Treasury note yield is about 1.37%, its highest within a year, having doubled in only six months. 

“Short-term bond prices will likely stay under pressure as yields increase in expectation of pandemic re-openings. But the bond market is known to anticipate inflation well beyond what is justified by the actual data,” said John Stoltzfus, Oppenheimer’s chief strategist. 

This comes as lawmakers prepare to debate President Biden’s proposed $1.9 trillion plan this week. Along with Fed chairman Jerome Powell delivering his testimony to the Senate.

Also troubling for investors this week is what “Big Short” investor Michael Burry has been saying on twitter.

Over the weekend, the investor said rampant speculation and betting with borrowed money has pushed the market to the brink of collapse. 

“Speculative bubbles always end when the gamblers become overloaded with debt,” the investor said, along with a chart displaying the S&P 500 and margin levels skyrocketing in recent months. “The market is on the brink,” Burry said.

After “free-falling” from $57,000 to $54,000, Bitcoin has been pushed back to new highs, just going past $58,000 for the first time…

Which has put the price of 1 bitcoin above the price of 1 kilo of gold…

This latest move comes after a debate between Peter Schiff and Tesla CEO Elon Musk on how Bitcoin compares to gold as a store of value. With Musk saying, “you might as well have crypto.”

Musk’s messages to his almost 48 million followers have influenced crypto prices dramatically in the past, and he often responds with others in dialogue about crypto. In fact, a tweet exchange with MicroStrategy CEO Michael Saylor may have pushed him towards Bitcoin to begin with.

Schiff managed to get Musk to discuss the gold vs Bitcoin topic.

Elon then replied to Schiff:

Schiff is not the only one skeptical of Bitcoin. With many experts having expressed numerous arguments against Bitcoin.

The asset has undergone numerous cycles, rising dramatically followed by fast downfall periods — sometimes having almost 80% of its value vanish before continuing its uptrend.

Gold advocate Peter Schiff has shared his skeptical position many times. “Since #Bitcoin has reached $50,000 I do admit it can move to $100,000,” Schiff said in a tweet, going on to say:

“But a move down to zero also can’t be ruled out. A temporary $100K is possible, but a permanent move to zero is inevitable. If you are not a gambler, buy #gold.”

The market’s past year has simply been incredible. Since hitting bottom in late March after the pandemic hit the economy hard, the S&P 500 has increased by 75%. And the Nasdaq has done even greater things, with that index doubling since its lows.

This has left many investors anxious over the potential for an overheated market causing a possible crash. But I’m not worried.

While a decline is possible, long-term thinkers should treat them as opportunities to invest in great businesses at bargain prices. With stocks like Berkshire Hathaway being the backbone of my portfolio, I have no anxiety about the direction of my wealth.

Berkshire Hathaway is the company that gave Warren Buffett his wealth. It owns over 60 subsidiary companies in a wide range of industries. Some of the more well-known are GEICO, Duracell, Fruit of the Loom and Dairy Queen.

Also, Berkshire has a large stock portfolio of about $277 billion. With $117 billion of this being in Apple shares.

Berkshire keeps a ton of cash to snatch up more subsidiaries and buy more shares. At the end of the third quarter, the company had over $145 billion in its bank accounts.

The important point here is that Berkshire’s businesses and investments were selected for their resilience. Consider Duracell, GEICO, BNSF Railway, and Berkshire Hathaway Energy. They provide things people need, even if the markets are in terrible shape.

On top of this, Berkshire’s 56-year track record proves it can withstand almost anything. Since 1965, the S&P 500 gave negative returns 12 times. Berkshire beat the S&P in all of those years but two, and usually by a pretty large margin.

Signs of an increasing embrace among the financial industry has pushed Bitcoin to new highs, with the digital currency approaching $50,000 for the first time ever, before falling back down.

A week after Tesla reported its $1.5 billion Bitcoin purchase, the asset continues to invade traditional finance circles, including news that Morgan Stanley might be considering an investment into Bitcoin. Canada also agreed to the first North American Bitcoin ETF.

With leaders like Elon Musk and top banks joining in, this gives fresh ammunition to Bitcoin’s rise. The asset neared $50,000 over the weekend before pulling back. Prices are higher by 40% in February, and were setting at around $46,800 at the time of this writing.

Edward Moya, senior analyst at Oanda Corp says that “This is not the first large weekend move Bitcoin has made and the next few days could easily see crazy swings.”

While the price has been trending up, the crypto could be another example of speculative frenzy that define this market — along with other investments like cannabis companies.

But on the other hand, maybe these increases are nothing more than a market reacting to a major shift happening now, with hints of more heavyweights getting into the market. During an interview recently, Co-President of JPMorgan Chase, Daniel Pinto, said that demand is not there on Bitcoin, but he is positive that will change.

Plus, a unit of Morgan Stanley is exploring whether Bitcoin would be a good option for its investors, according to people close to the unit. Moving forward with investments would need approval by the company and regulators.

“With every announcement like the one issued by BNY Mellon, more institutions are starting to use these digital assets,” said Patrick Campos, strategist at Securrency, a developer of blockchain regulatory technology.

“Tesla’s announcement will encourage other large institutions to accept crypto more and more,” he said.

    Following the end of former president Trump’s impeachment, lawmakers are scheduled for a recess this week, delaying their effort to deliver another round of stimulus checks and other relief to Americans.

    The Senate and House will reconvene on February 22, when they begin to work out the specifics of President Joe Biden’s $1.9 trillion plan.

    Nancy Pelosi has told reporters that she hopes for approval “by the end of February so we can enact it before unemployment expires” on March 14.

    The House Ways and Means Committee recently enacted a part of President Biden’s plan by a margin of 24-18, which includes the $1,400 payments. Other sections of the bill will be voted on one at a time as the DNC-led Senate intends to use reconciliation to get around opposition from the GOP.

    The measure cannot get out of committee until the house votes on them after they reconvene.

    The specifics surrounding the package’s income levels still need to be discussed, as moderates of both parties argue the next stimulus should be more targeted.

    The IRS is expected to start issuing checks as soon as the bill becomes law.

    According to a CNET timeline projection, the earliest the $1,400 stimulus check could be enacted is Feb. 26. The bill could then be signed into law by Biden by March 1, with direct deposits being sent out during the week of March 8.

    On top of the stimulus checks, the measure also increases tax credits for low-income households and people paying for care for adults or children. Most American parents would get $3,000 per year for every child aged 6 to 17 and $3,600 per year for every child under the age of 6.

    Families can also decide to get monthly payments – around $250 to $300 – instead of a yearly lump sum. Tax payments would start going out in July if lawmakers approve the plan.

    Silver markets have gone higher this past week, then turned back, then went up yet again. Overall, this is a good indication that silver is ready to keep its upward trend, and therefore I believe it is worth watching the metal and whether or not it can reach a $28 level. 

    If it can break that mark, then it will likely continue to go higher. And it would be at that point, I would expect it to go toward its recent highs near the $30 level, which in the past has been a major resistance point.

    The 50 day EMA is $25.80, and it suggests we will to continue to witness buyers underneath so I like the idea of buying the dips, but it’s important to know you cannot just jump in because some people are trying to pull a squeeze

    To be honest, the silver market is much too big to manipulate, unless you are J.P. Morgan. But buying the metal when it is down and taking profits quickly is a good idea. These profits will probably come pretty quick, but I also see a lot of resistance at the $30 level. 

    If we go higher than $30 on any one daily close, that would change the game, and then I would expect the silver markets to take off for a huge move. It’s then that I would look for silver to go to historic levels like $50.

    Mastercard is preparing to give businesses the option to get paid in cryptocurrency this year.

    According to insider sources, the plan is to have Mastercard customers’ crypto payments settled in crypto at certain merchants. The payment giant has not yet said which cryptos it plans to support.

    These details come after new CEO Michael Miebach gave a Q4 promise to integrate crypto-currency payments “directly on Mastercard’s network”, during his first earnings call on Jan. 28. He said this change will give flexibility to both merchants and customers.

    In the past, Mastercard supported some cryptocurrency through its partners Uphold and Wirex. But those systems converted the coins into fiat currency before reaching the merchant.

    The new program could change everything for businesses who opt in. They will be able to operate outside the fiat ecosystem entirely.

    Although that is hardly a safe bet given that most bitcoin (BTC, +3.66%) owners see their coins as investments, not currencies. And the insider source stressed there’s no guarantee Mastercard’s new initiative will even support bitcoin.

    Instead, cryptos will be selected using Mastercard’s “Principles for Blockchain Partnerships” framework. Released after Mastercard’s Libra exit, the document put a focus on consumer protection, stability, and regulatory issues in selecting potential crypto partners.

    “Most of today’s 2,600 digital currencies do not meet these criteria,” Mastercard stated.

    Very few merchants currently accept digital currencies. Tesla’s plans to sell vehicles for bitcoin remains hypothetical. And a large crypto economy is not yet a reality.

    But Mastercard is creating the foundation with years of patents in the digital currency area. The company has said it has 89 blockchain patents and is awaiting approval on another 285.

    The payments industry is working rapidly to support blockchain-based currencies. PayPal has said it plans to roll out bitcoin payments later in 2021. While Visa’s CEO says they might add crypto payments sometime in the future.

    Shares in the cannabis industry spiked on Wednesday, continuing a months-long bull trend due to anticipations of decriminalization under President Biden’s administration, as the Reddit group behind the recent GameStop frenzy started to promote the stocks.

    One message on the forum, called WallStreetBets, told investors that Tilray Inc and Aphria Inc have much more room to go up.

    That post was liked by about 10,000 people in only twelve hours and shares in those two companies increased by 21% and 10%.

    Meanwhile, shares of pot producer Canopy Growth Corp went higher by 3% after Tuesday’s events. And the ETFMG cannabis tracker, which has already more than doubled since November’s elections, gained an additional 7.3%.

    Tilray, which is currently merging with Aphria in what is known as a “reverse merger”, has shot up by more than 400% since the complicated merger was announced in December 2020. While Aphria has also advanced by 243%.

    Shares of other cannabis companies have hit record highs, aided by legalization in many states and the Democrats’ promise to decriminalize the substance at a federal level.

    Changes promised by some lawmakers could give the cannabis industry access to more banking products and open the industry to new investors.

    The performance of marijuana as an industry as a whole was trending well below the S&P 500 for most of the previous 12 months. But the elections, which featured several states making recreational and medical use of cannabis legal, gave a nice increase to the business.

    Since then, the Horizons Marijuana Life Sciences ETF has popped almost 149%, and it’s higher now by around 80% in the past year, compared to the almost 17% returns of the S&P 500. Two pot companies have performed well over these 12 months. They are Planet 13 (OTC:PLNH.F) and Trulieve Cannabis (OTC:TCNNF).

    There are good reasons to believe these companies will keep outperforming the market not only throughout 2021 but also in the long-term. Read on to find out why.

    Florida brings in billions

    Trulieve Cannabis has put most of its focus on Florida’s market, and there are advantages to this strategy. Cannabis is illegal at the federal level, so it is not legal to transport it from state to state. Many pot companies have attempted to create a strong presence in numerous states by owning entire supply chains in each, but doing that can strain a business’s resources.

    Trulieve Cannabis instead focuses on the one state of Florida. And this has strategy has done wonders so far. The company currently owns 70 dispensaries in the State, and an impressive 52% market share.

    Trulieve Cannabis reported revenue of $136.3 million in its third quarter, a 93% increase. The company also had a net income — a rare thing in the marijuana business — of $4.7 million. The company’s operations are booming. They have a great retention rate of 79% — which means they have very loyal customers — while same-store sales increased 19% year over year. The pandemic has done little to slow down the company.

    Meanwhile, Florida’s cannabis demand is estimated to keep expanding at a compound growth rate of 25.3% through 2025. And Trulieve Cannabis’ strong foundation in Florida will let it reap the rewards of this growth. Investors wanting to cash in on cannabis should seriously consider adding this marijuana stock to their portfolios.

    A unique business

    According to an Expedia poll, 74% of Americans prefer experiences over products. Planet 13 is creating its brand around this idea. The company is based in Las Vegas, where recreational use of pot is completely legal. But Planet 13 does more than just sell pot to its customers.

    The company’s store, which is located near the Las Vegas strip, is a tourist attraction for cannabis lovers or the cannabis curious. Visitors can watch Planet 13’s production process and purchase cannabis at the same time. They also have a restaurant and a facility for special occasions.

    Planet 13 performed well during Covid. In their third quarter, the company brought in $22.8 million in revenue, which is a 36.5% year-over-year growth, and this despite being at only 50% capacity. Meanwhile, Planet 13 also recorded a net income of $0.2 million, compared to their net loss of $1.7 million last year.

    Two drivers of growth might help this company continue to soar. First, Nevada’s market is estimated to grow at 16.9% through the year 2025. And Planet 13 accounts for around 9% of the total pot sales in the state.

    Second, they are planning to build superstores in more high-profile cities, including New York, San Francisco, Miami and others. If the company replicates their success in Las Vegas elsewhere, there is no limit to how high they can go. With these opportunities available, Planet 13 looks like it will deliver market-beating profits in the long run.

    Ad Blocker Detected!

    Advertisements fund this website. Please disable your adblocking software or whitelist our website.
    Thank You!