Bitcoin and the aggregated crypto market have been struggling to gain any significant momentum
BTC has pushed off of its recent lows, however, it remains in a somewhat precarious position as its price continues trading sideways
Where it trends next will likely depend largely on the stock market, which has had intense influence over its price action
Still, its independent strength remains, as most on-chain indicators are flashing bullish signs
One analyst is now noting that the crypto was just able to post an incredibly bullish technical crossover
He notes that this crossover has an 80% success rate, which could mean a serious uptrend is imminent in the short-term
Bitcoin and the entire crypto market have been struggling to gain momentum over the past few days and weeks.
This has caused both bulls and bears to largely reach an impasse as BTC consolidates around $11,400.
Where it trends in the near-term may depend largely on its reaction to the resistance it faces around $11,600, as a continued bout of trading beneath this level could open the gates for it to see further downside.
One analyst, however, is noting that Bitcoin was just able to post an ultra-bullish technical crossover, which seems to indicate that a move higher is just around the corner.
BITCOIN CONTINUES CONSOLIDATING AS STOCK MARKET CORRELATION PERSISTS
At the time of writing, Bitcoin is trading up just under 1% at its current price of $11,450. This is around where it has been trading throughout the past couple of weeks.
The lack of momentum seen by BTC as of late has come about due to a consolidation phase within the stock market.
All eyes are closely watching to see if a phase 2 stimulus package is released in the near-term. Investors are also awaiting the results of the election before jumping into positions.
THIS INDICATOR SUGGESTS BTC IS ABOUT TO MAKE A BIG PUSH HIGHER
One trader recently explained that Bitcoin just posted a bullish TK cross above its cloud. He notes that this historically leads to a sharp upwards movement, with an 80% strike rate.
“Prior bullish TK recrosses with price above Cloud… you be the judge […] ill take the 80% hit rate.”
Third-quarter earnings season kicks into high gear with tech and healthcare names among those being closely watched.
Third-quarter earnings season kicks into high gear in the week ahead with more than 15% of the companies in the S&P 500 set to report.
Here’s a look at some of the more notable names expected to report their latest financial results:
Netflix, Inc. (NFLX) – Get Report is expected to report adjusted net income of $1 billion, or $2.13 a share, on sales of $6.4 billion after the market closes on Tuesday, based on a FactSet survey of 38 analysts.
In the same period a year ago the company posted earnings of $1.47 a share on sales of $5.2 billion. It reported net income of $270.7 million.
The company offered guidance of $2 a share on July 17. Shares have risen 9.9% since then.
In the upcoming quarter, analysts are forecasting adjusted net income of $561.6 million, or 94 cents a share, on sales of $6.6 billion.
For the year, analysts project revenue of $24.9 billion.
Abbott Laboratories (ABT) – Get Report is expected to report net income of $1.6 billion, or 90 cents a share, on sales of $8.5 billion before the market opens on Wednesday, based on a FactSet survey of 19 analysts.
In the same period a year ago, the company posted earnings of 84 cents a share on sales of $8.1 billion. It reported net income of $1 billion.
The stock has risen 11.3% since the company last reported earnings on July 16.
In the upcoming quarter, analysts are forecasting net income of $2.1 billion, or $1.21 a share, on sales of $9.6 billion.
For the year, analysts project revenue of $33.2 billion.
Chipotle Mexican Grill (CMG) – Get Report is expected to report adjusted net income of $96.9 million, or $3.44 a share, on sales of $1.6 billion after the market closes on Wednesday, based on a FactSet survey of 31 analysts.
In the same period a year ago the company posted earnings of $3.82 a share on sales of $1.4 billion. It reported net income of $91 million.
The stock has risen 13.3% since the company last reported earnings on July 22.
In the upcoming quarter, analysts are forecasting adjusted net income of $115.7 million, or $4.13 a share, on sales of $1.6 billion.
For the year, analysts project revenue of $6 billion.
Coca-Cola Company (KO) – Get Report is expected to report net income of $2 billion, or 46 cents a share, on sales of $8.4 billion before the market opens on Thursday, based on a FactSet survey of 18 analysts.
In the same period a year ago the company posted earnings of 56 cents a share on sales of $9.5 billion. It reported net income of $2.6 billion.
The stock has risen 5.9% since the company last reported earnings on July 21.
In the upcoming quarter, analysts are forecasting net income of $1.8 billion, or 41 cents a share, on sales of $8.6 billion.
For the year, analysts project revenue of $32.7 billion.
Quest Diagnostics (DGX) – Get Report is expected to report adjusted net income of $514 million, or $3.72 a share, on sales of $2.7 billion before the market opens on Thursday, based on a FactSet survey of 16 analysts.
In the same period a year ago, the company posted earnings of $1.76 a share on sales of $2 billion. It reported net income of $206 million.
The stock has fallen 7.4% since the company last reported earnings on July 23.
In the upcoming quarter, analysts are forecasting adjusted net income of $404.7 million, or $2.77 a share, on sales of $2.4 billion.
For the year, analysts project revenue of $8.8 billion.
As we inch closer to the U.S. presidential election, things have quieted down for precious metals. But don’t let that fool you: there’s plenty of action to come.
In this edition of the Weekly Wrap Up, host Craig Hemke and legendary investor Eric Sprott break down all the gold and silver news you need to be ready for it, including:
Why we are in a holding pattern until the U.S. election?
What the COMEX is trying to tell us about physical supply?
Plus: The first thing Eric needs to know when evaluating a share
“I can make a very good prediction. We’re one week closer to the election, and that election, I think, might be quite a focal point, post-election. And one of the things that I’m coming to think is that President Trump will win… And I say that for a number of reasons. First of all, the pollster—and I wish I would have remembered their name—who predicted he would win last [time], has predicted he will win this year… I just see events unfolding that are very analogous to 2016…”
To hear Eric’s full thoughts on the week’s gold and silver news, listen here:
Since 2008, our customers have trusted us to provide guidance, education, and superior customer service as we help build their holdings in precious metals—no matter the size of the portfolio. Chairman, Eric Sprott, and President, Larisa Sprott, are proud to head up one of the most well-known and reputable precious metal firms in North America. Learn more about Sprott Money.
From what recipients will be paid to what workers could owe in payroll tax, big changes are on the way for our nation’s top social program.
There isn’t a social program in this country that bears more importance to the financial well-being of seniors than Social Security. Each month, nearly 65 million people receive a Social Security benefit, and more than 46 million of them are retired workers. Of these retirees, more than 3 in 5 rely on their monthly payouts to account for at least half their income.
It’s also a dynamic program. Despite laying a financial foundation for those who can no longer provide for themselves, the Social Security program undergoes a number of changes every year. It just so happens that these updates were unveiled by the Social Security Administration (SSA) this past week.
Here’s a closer look at the seven biggest changes to Social Security in 2021.
A person grasping a Social Security card between their thumb and index finger.
1. Recipients are going to get more money
October is the most important time of the year for Social Security recipients, primarily because it’s when the SSA announces the cost-of-living adjustment (COLA) for the upcoming year. Think of COLA as the “raise” that Social Security beneficiaries receive that’s designed to keep their benefits on par with inflation.
For 2021, Social Security beneficiaries are looking at a good news/bad news scenario. The good news is simple: You’re getting more money. The SSA announced a 1.3% COLA for the upcoming year, which for the average retired worker is going to translate into an extra $20 a month, working out to an estimated monthly payout of $1,543 a month by January 2021. Considering that prices for goods and services headed lower between March and May as a result of the coronavirus disease 2019 (COVID-19) pandemic, a 1.3% COLA is a victory for the program’s 64.8 million recipients.
The bad news is that 1.3% ties for the second-smallest positive COLA in history. But with inflation in shelter and medical-care services outpacing 1.3%, senior citizens are going to see the purchasing power of their Social Security income decline, once again.
2. The full retirement age is inching higher
The only change we knew for certain that would happen in 2021 was an increase in the full retirement age (which is also known as “normal retirement age” by the SSA). A person’s full retirement age is the age when they can receive 100% of their monthly payout, as determined by their birth year.
In 2021, the full retirement age is going to inch up higher by two months, to 66 years and 10 months for people born in 1959 (i.e., beneficiaries who can become newly eligible next year). Put simply, claiming benefits at any point prior to reaching your full retirement age means accepting a permanent reduction to your monthly payout. Conversely, waiting to take benefits until after 66 years and 10 months for workers born in 1959 can pump up retirement benefits.
Social Security’s full retirement age will peak at age 67 in 2022 for anyone born in 1960 or later.
3. High earners can expect to pay more taxes
Keep in mind that changes to the Social Security program don’t just affect people currently receiving benefits. One of the biggest updates next year is an increase to the payroll tax earnings cap.
The payroll tax is Social Security’s workhorse. In 2019, it generated $944.5 billion of the $1.06 trillion collected by the program. Revenue is brought in by applying a 12.4% tax on earned income (wages and salary, but not investment income) ranging between $0.01 and $137,700, as of 2020. Note, all earned income above $137,700 in 2020 is exempt from the payroll tax.
In 2021, all earned income up to $142,800 will be taxable, representing an increase of $5,100. For the roughly 6% of workers who are expected to hit this cap, we’re talking about an increase in payroll tax of up to $632.40 next year.
If you’re wondering how the SSA came up with $142,800 as next year’s cap, it has to do with the year-over-year increase in the National Average Wage Index (NAWI). Between 2018 and 2019, the NAWI rose from $52,145.80 to $54,099.99 — a gain of 3.74%, or 3.7% when rounded to the nearest tenth of a percent. Next year’s tax cap is 3.7% higher than the $137,700 in 2020. It’s that simple.
4. The wealthy can pocket a bigger monthly benefit
Though high earners will be tasked with opening up their wallets a bit wider in 2021, well-to-do beneficiaries can also expect to receive more. After the SSA capped monthly retirement benefits at $3,011 for persons of full retirement age in 2020, the maximum payout at full retirement age is increasing to $3,148 a month in 2021. That’s an extra $1,644 a year for wealthy workers.
To net this maximum monthly payout, workers would need to have done three things:
Waited until their full retirement age to claim benefits.
Worked at least 35 years, as every year less of 35 worked results in a $0 being averaged into their eventual monthly payout.
Hit or surpassed the maximum taxable earnings cap in each of the 35 years the SSA takes into account when calculating a person’s retirement benefit.
A check next to all three of these criteria allows a retiree to net the maximum monthly benefit.
5. Disability income thresholds climb higher
There’s no question that Social Security’s primary job is to financially protect our nation’s retired workforce. But don’t overlook the fact that 9.7 million beneficiaries are receiving a monthly payout from the Social Security Disability Insurance Trust. In 2021, the income thresholds where benefits cease to disabled beneficiaries will climb higher.
For example, non-blind disabled beneficiaries can earn up to $1,260 a month in 2020 without having their Social Security payouts stopped. Next year, this threshold is increasing $50 a month to $1,310. This means non-blind disabled beneficiaries are able to earn up to $600 extra annually without losing their benefits.
The increase is even larger for blind disabled beneficiaries. Folks who fall into this category will be allowed to earn up to $2,190 a month in 2021 — $80 a month higher than the 2020 threshold — without having their benefits stopped.
6. Withholding thresholds for early filers receive a boost
Social Security has a number of ways it penalizes early filers. None is arguably more confusing or surprising to retired workers than the retirement earnings test. Put simply, the retirement earnings test allows the SSA to withhold some or all of an early-filer’s benefit if they earn above a preset income threshold. In 2021, these income thresholds are heading higher.
For instance, early filers who won’t reach their full retirement age in 2020 are only allowed to earn up to $18,240 a year ($1,520 a month) before $1 in benefits can be withheld for every $2 in earnings above this threshold. In 2021, early filers who won’t reach full retirement age can earn up to $18,960 annually, or an extra $60 a month ($1,580/month) before withholding kicks in.
Early filers who will reach full retirement age in 2021 will see a boost in the withholding threshold, too. Next year, early filers who hit their full retirement age at some point during the year will be allowed to earn up to $50,520 ($4,210 a month) before $1 in benefits is withheld for every $3 in earnings above this threshold. For those who are curious, that’s an increase of $160 a month from 2020 levels.
Take note that the retirement earnings test is no longer applicable once you hit your full retirement age (regardless of when you claimed benefits), and withheld benefits are returned to recipients in the form of a higher monthly payout after hitting full retirement age.
7. You’ll have to earn more to qualify for a retirement benefit
Last but certainly not least, working Americans are going to have to try a bit harder to qualify for a Social Security retired worker benefit.
Despite what you might have heard, Social Security isn’t simply given to someone for being born in the United States. In order to receive a retirement benefit, you’ll need to have earned 40 lifetime work credits, of which a maximum of four credits can be earned each year. These credits are awarded according to an individual’s income in a given year.
For example, workers received one lifetime work credit in 2020 with $1,410 in earned income. Put another way, if a worker nets at least $5,640 in earned income ($1,410 X 4) this year, they’ll receive the maximum four credits.
In 2021, it’ll take $1,470 in earned income to earn one lifetime work credit, or $5,880 for the full year to maximize your Social Security work credits.
Though folks will have to work a bit harder to ensure a retirement benefit from Social Security, the bar to qualify is set relatively low.
Rosengren called for a rethink on issues related to U.S. financial stability.
Tougher U.S. financial regulation is needed to avoid the rise of excessive risk-taking and asset bubbles in the markets at a time when the Federal Reserve is keeping interest rates low, two senior Fed officials told the Financial Times in an article published on Saturday.
Boston Fed President Eric Rosengren told the newspaper that the Fed lacked sufficient tools to prevent companies and households from taking on “excessive leverage” and called for a rethink on issues related to U.S. financial stability.
“If you want to follow a monetary policy … that applies low interest rates for a long time, you want robust financial supervisory authority in order to be able to restrict the amount of excessive risk-taking occurring at the same time,” the FT quoted him as saying.
“(Otherwise) you’re much more likely to get into a situation where the interest rates can be low for long but be counterproductive,” Rosengren said.
“As soon as there’s a risk that hits, everybody flees and the Federal Reserve has to step in and bail out that market, and that’s crazy. And we need to take a hard look at that,” he said.
A representative of the Boston Federal Reserve confirmed Rosengren’s remarks made to the Financial Times, adding he was interviewed on Oct. 8. Kashkari was not immediately available to comment on the article published on Saturday.
(Reporting by Kanishka Singh; Editing by Sonya Hepinstall)
(Kitco News) There is pressure building on the International Monetary Fund (IMF) to sell some of its gold to provide debt relief for poorer nations.
Growing debt concerns have been gaining attention as countries struggle to support their economies amid the coronavirus pandemic. The topic was one of the top items discussed during this week’s IMF annual meetings.
The Jubilee Debt Campaign (JDC) is using this as an opportunity to urge the IMF to start selling some of its gold to provide debt relief for the world’s struggling nations. According to the JDC’s press release published on Monday, gold sales could provide much-needed help to underdeveloped countries struggling with the COVID-19 pandemic.
It all comes out to the numbers, according to the JDC. Gold spot prices rose from $1,500 an ounce to $1,900 an ounce this year already, which means that the IMF’s total gold reserves of 90.5 million ounces are now worth around $175 billion. This is around a $38 billion increase in value.
The JDC notes that if the IMF sold less than 7% of its total gold reserves, it would result in a $12 billion profit, which would be enough to cancel debts of more than 70 poorest nations for the next 15 months. And even after such a sale, the IMF’s gold receivers would still be worth more than $26 billion since the start of the year.
“The profit from selling less than 7% of the IMF’s gold would be sufficient to cancel all debt payments by the poorest countries in the world to the IMF and World Bank for the next 15 months. This would be less than the gain in value of the IMF’s gold since the Covid crisis began,” the press release said.
The Jubilee Debt Campaign is a U.K.-based charity organization with the goal of ending poverty caused by unjust debt.
The poorer nations don’t have the monetary tools available to more developed countries to help them deal with the fallout from COVID-19, argues Jubilee Debt Campaign director Sarah-Jayne Clifton.
“The IMF has the tools and resources to help plug this gap. It has the ability now to unlock a comprehensive debt payment cancellation scheme … This would have a huge impact, helping poorer countries tackle the current economic and health crisis and supporting their faster economic recovery in years to come,” Clifton said in the press release.
However, despite the call, it is looking very unlikely that the IMF would be willing to sell any of its gold reserves, especially during such uncertain times.
“The IMF has no plans to sell gold at this time,” The Guardian quoted IMF spokesman Gerry Rice as saying. “Gold reserves provide fundamental strength to the IMF’s balance sheet, enabling the Fund to lend safely and at low cost to its member countries. This is particularly important at present, when the IMF is undertaking exceptionally large support for its membership, including its poorest member countries, in the context of the Covid-19 pandemic.”
Rice added that the IMF has already approved emergency financing of over $10 billion to 47 low-income countries since March.
The World Gold Council (WGC) also said that gold will continue to play a key role in the IMF’s portfolio.
“The IMF views gold as an important component of its balance sheet, and it has expressed that it currently has no plans to sell gold,” WGC head of Central Banks Relationships Shaokai Fan told Kitco News in an email on Wednesday.
Moreover, the WGC sees gold playing a vital role for central banks around the world during this crisis despite the slowing demand this year.
“We believe that central banks will continue to be net buyers of gold this year, although the quantity of purchases may not be as large as in previous years,” said Fan.
The official sector’s gold purchases reached record levels in 2018 and 2019, seeing a total of 656 and 667 tons bought, respectively. So far, in 2020, central banks have bought just over 200 tonnes of gold.
The Fisker Ocean looks like a formidable rival to Tesla’s Model X and Y
When it comes to the burgeoning luxury EV market, Tesla (NASDAQ:TSLA) gets all the love on Wall Street — and reasonably so. Elon Musk and company pioneered the space, dominate the space and continue to make the market’s best and most desirable vehicles. But in this market traditionally dominated by Tesla, it’s time to start throwing some love at an emerging luxury EV automaker by the name of Fisker, which is going public through a reverse merger with Spartan Energy Acquisition Corp (NASDAQ:SPAQ) stock.
The reason to like Fisker — and SPAQ stock — is simple.
The EV maker has enough enough talent and experience — it’s headed by Henrik Fisker, who is a legend when it comes to luxury automobile design — to realistically emerge as a viable competitive threat to Tesla in the burgeoning and soon-to-be-enormous luxury EV space.
Is Fisker a Tesla killer? No. Far from it.
But Tesla won’t run away with the entire luxury EV market by itself. Tesla will be the leader. Fisker will be a solid second-fiddle.
Fisker’s implied market cap today based on the SPAQ stock price? Around $4 billion. Tesla’s market cap? Close to $400 billion.
Needless to say, SPAQ stock has huge long-term upside potential amid the EV boom of the 2020s.
Here’s a deeper look.
EVs Are the Future
There will be no greater disruption in the 2020s than the electrification of automobile transportation.
Clearly, the shift towards EV has already started. It will only accelerate in the 2020s.
Demand is shifting, as over 80% of prospective car buyers today want an EV. Laws are shifting, as California just banned the sale of gas cars post-2035. Technology is improving, with the average range of an EV has increasing by 140% since 2011. Costs are falling, with average EV prices having dropped 70% since 2010. Supply is pivoting, as every auto maker in the world is making an all-out blitz into the EV category.
The future couldn’t be any clearer.
EVs are on the cusp of disrupting the multi-trillion-dollar auto market, and over the next two decades, will become globally ubiquitous.
Where there’s disruption, there’s opportunity.
Sure, all the major auto OEMs are going to launch new EVs and try to keep up with the times. But they’ve been glacially slow in doing so – and in all the time they’ve wasted deciding if EVs are the future, new auto brands committed to a 100% EV future have emerged and are ready to rapidly steal share from these auto market incumbents.
Right now, you should add Fisker and SPAQ stock to that list.
Fisker Ocean Is the Real Deal
Fisker is not just another up-and-coming EV maker with a bold vision and a small chance of success.
The company is headed up by Henrik Fisker, a man whose reputation in unrivaled in the luxury auto market. He was, after all, the design brain behind many of the luxury automobile world’s most iconic vehicles, such as the Aston Martin DB9, the Aston Martin Vantage, the BMW Z8 and the BMW X5.
Given his experience and track record, when Henrik designs a car, the world pays attention.
Over the past several years, Henrik has spent all his time and effort designing the Fisker Ocean, which — when it launches in fourth quarter of 2022 — will be a legitimate rival to Tesla’s Model X and Y in terms of performance, design and features.
The Fisker Ocean offers best-in-market driving range at up to 300 miles (which is largely consistent with base versions of the Model X and Y).
It also offers four-wheel drive for off-roading, lots of horsepower, a sub 3 second 0-to-60 miles-per-hour get-up, a large digital display screen equipped with a state-of-the-art in-vehicle software platform, and a very aesthetic, futuristic exterior design (all of these features are comparable to the Tesla Model X and Y).
Sure, it’s smaller in terms of cargo space (45 cubic feet with seats down, versus 60+ cubic feet for the X and Y) and seating space (it’s a 5-seater, versus options for 7-seater in the X and Y). But the Ocean makes up for those shortcomings via a built-in solar panel roof (which will allow for auto-recharging while driving, and therefore, result in longer driving ranges) and a fully “vegan” interior (the entire interior is made from recyclable materials).
So, on a technical specs and aesthetics basis, the Ocean is pretty close to rivaling Tesla’s Model X and Model Y.
Yet the Ocean will retail for just $37,500 – well below the $50,000 base price for the Model Y, and $80,000 base price for the Model X. After tax credits, that retail price falls to about $30,000 – putting it on par with most mid-size, gas-powered luxury SUVs out there (and below many of them).
Needless to say, then, if Fisker brings the Ocean to market at this $37,5000 price point, it’ll be a complete game-change for the luxury EV market — and huge upside catalyst for SPAQ stock.
Executional Roadmap Is De-Risked
Of course, that’s a huge “if”. There’s a lot of execution risk when it comes to scaling manufacturing for a new car, especially for a company that has yet to manufacture any cars at scale like Fisker.
Plus, as many know, this is not Henrik Fisker’s first foray into the EV space. His first car – the electric sports car Karma, which counted Justin Bieber and Al Gore as customers – ended up being a flop after the company’s battery supplier went under.
But that’s why Fisker is aiming to outsource all of the manufacturing this time around, through Volkswagen – the world’s largest automobile maker. In so doing, Fisker is significantly reducing execution risk, battery supplier reliance, capital requirements, manufacturing costs and speed-to-market.
Plus, the partnership will allow Fisker to hyper-focus on design and software – two components which will help the company establish and sustain competitive advantages.
Overall, then, while there is still tons of execution risk here, there is also much less risk for Fisker than for most other emerging EV makers — and that makes SPAQ stock especially attractive amid the sea of red-hot EV stocks.
Huge Upside for Fisker Stock
The math to SPAQ stock scoring you huge gains isn’t hard to follow.
Management is targeting 225,000 deliveries, $13.2 billion in revenue, and $2.8 billion adjusted EBITDA by 2025. My modeling suggests those targets are very doable, given that the EV market will likely measure 10+ million global unit sales by then.
Tesla stock, over the past year, has average a forward EV/EBITDA multiple of ~20X. Based on a 20X forward multiple, $2.8 billion in 2025 adjusted EBITDA implies a 2024 enterprise value for Fisker of $56 billion.
The current enterprise value – after backing out ~$1 billion in cash – is $3 billion.
Thus, SPAQ stock does have a semi-visible runway to rise almost 20X over the next five years.
Bottom Line on SPAQ Stock
I can guarantee you that not many stocks are going to rise 20X over the next four years alone.
But Fisker could, amid a surge in luxury EV demand.
For that reason alone, SPAQ stock should absolutely be on your buy radar today.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
In three years, a younger generation of banking customers won’t do business with a traditional fiat bank unless it offers access to crypto.
Within a few years, a younger generation of financial services customers are going to be able to walk into a bank and gain access to credit products, savings accounts and investments that can host both crypto and fiat assets. In fact, the inroads that will allow for all of this to happen are already breaking ground.
You probably already know that Kraken, a cryptocurrency exchange based out of San Francisco, is now the first-ever cryptocurrency business in the United States to become a bank. For now, being an officially chartered bank means that Kraken will be able to offer more banking and funding options to existing customers. It also means Kraken Financial is going to be able to operate in multiple jurisdictions without having to deal with state-by-state compliance plans.
Kraken is currently working with Silvergate Bank to offer SWIFT and FedWire funding options to U.S. customers. More and more of these kinds of partnerships will become the status quo in the near future. That’s why now is the time for traditional banks that are lagging behind to start paying attention.
Silvergate Bank is a step ahead of the rest at the moment. The company boasts 880 digital asset companies as clients. Those clients have deposited more than $1.5 billion with the bank. That’s still a small amount of money relative to the market capitalizations of most major banks or even most major cryptocurrencies for that matter. That said, keep in mind that major crypto exchanges Coinbase and Gemini are now customers of JPMorgan, even though CEO Jamie Dimon routinely denounced the value of Bitcoin (BTC) and cryptocurrencies just a few short years ago.
Consumers will soon define a “full service” bank as one that offers financial services in both crypto and fiat. The time to start acquiring the necessary tools of the crypto banking trade is right now. Banks need to start adapting or get left behind. Make no mistake about it.
But what tools do they actually need?
Blockchain forensics tools
A crime scene investigator can use a black light or fingerprint powder to uncover all kinds of evidence. The idea that Bitcoin or blockchains are completely private has been dispelled again and again. In fact, blockchain-based currencies are much more open to investigative methods than fiat currencies. It is certainly possible to uncover the origins of transactions. In order for banks to do that with cryptocurrency, they will need blockchain explorers and risk scoring tools that can go a step further than the current publicly provided services.
Those forensics tools already exist, and they allow investigators to follow digital paper trails across addresses, wallets, transactions, blockchains and other digital entities, using techniques like clustering and heuristics. Companies in this space are developing their own proprietary searching algorithms designed to detect the origins of concealed funds and unmask criminals.
Remember, traditional fiat is still the currency of choice for money laundering professionals. Cryptocurrency is in its nascent days and will emerge as a powerful force in reducing the money laundering risk around the world.
DeFi is not going to be the answer for the average consumer
Make no mistake about it, the decentralized finance sector of cryptocurrency holds virtually endless promise. Yield farming may be all the rage, but the DeFi sector is so much more than that.
DeFi projects can allow you to take technical and fundamental trading advice from other traders and only pay a fee if you make a profit. You can pour your capital into digital investment portfolios without having to pay mutual fund fees that can eat away at hundreds of thousands of dollars worth of your retirement portfolio. Investors can also hold derivatives of their desired cryptos without having to constantly switch between blockchains. These innovations are just the tip of the iceberg. As the market continues to mature, more and more DeFi projects will allow us to do things in the future that we are not even thinking about right now.
There is, however, one fundamental problem with all of this. The average banking customer isn’t going to engage with decentralized finance protocols for decades. Yes, the most avid crypto enthusiast knows enough to dig up the contract address of an ERC-20 token, trade it on decentralized exchanges, and invest that token through lending platforms and liquidity pools.
However, the average person is likely still going to want to talk to a banker from time to time, even if they hold most of their wealth in the form of cryptocurrency. Furthermore, governments around the world are working on their own government-backed cryptocurrencies, which the average consumer will definitely want access to at their bank of choice.
Sooner rather than later
What will happen if banks don’t join the party?
Any bank still approaching cryptocurrency with trepidation over the next 18 months is at risk of finding itself dead in the water at the hands of Kraken and other banks that jump on board and take the plunge.
Now is the time for traditional fiat banks to engage in empowering the individual with greater access to crypto. If they don’t, they will be swept away by the rising tide of cryptocurrencies ripe to reinvent the world’s financial system one way or another.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Low interest rates are a big challenge for retirees today. To help cope, try these three strategies.
A long time ago in a galaxy far, far away, retirees could live off the interest from their CDs and bonds. A lot has changed since then. With interest rates now at historical lows, retirees are feeling the pinch.
This doesn’t mean retirement is out of reach. Only we need to plan a little smarter and harder.
Here are three examples of how to boost retirement income.
1. Start with reducing your expenses.
My clients make a list of all expenses. Line by line, each expense is then scrutinized. I ask them, is there a way to reduce the expense? Can you live without it or on a smaller scale? Cable bills, cellphone bills, subscription services, all of these add up.
Other expenses are not so obvious. Cash allowances to adult children are a common budget leak. Retired parents need to have a heart-to-heart with their adult children on how their gifts could potentially negatively impact Mom and Dad’s retirement.
Also, review and request insurance proposals for health, home and auto. I usually find new insurance vendors with better offers. Or, if it makes sense, try increasing the deductible. Increasing deductibles can save you money on premiums. This assumes you have the cash to meet the higher deductible when you file an insurance claim.
If you are still paying for life insurance, does that still make sense? If the mortgage is paid off and kids out of college, perhaps reallocating premium dollars to long-term care insurance might make more sense.
2. Next, find ways to reduce your taxes.
Scour your income tax returns for leakage. Are you offsetting income with losses? Taxpayers can use $3,000 of investment losses – if a stock or mutual fund lost money – against ordinary income. If you give to charity, are you giving in the most tax favorable way? Donating a high-flying stock may make more sense than giving cash. Donating stock to a qualified charity gets you out of the stock position without incurring taxes from selling. This way your cash, which you would have donated, is instead preserved for your living expenses.
For those with consulting or self-employment income, are you saving in a tax-favorable retirement account? Contributions to a Self-employed (SEP) IRA are tax-deductible, reducing your taxable income and increasing savings for future retirement needs.
3. Focus on total portfolio income.
Many retirees have interest and dividends reinvested back into the portfolio. Instead, try having all portfolio income paid out to you. Each week my retired clients receive a physical check or a wire to their bank account from the interest and dividends generated from their portfolios. The advantage is clients never touch their principal. The downside is the portfolio may not grow as much if dividends were reinvested. That is a trade-off. Many retirees prefer to take the income instead of touching principal.
The key to all of this to understand is that the old way of retirement income planning – company-provided pensions, high-interest CDs or working longer – is unfortunately not as reliable as it used to be. Today, retirees must work a little smarter and harder.
If you are feeling uncertain about your retirement income plan, I encourage you to speak with a qualified, experienced financial adviser. Sometimes the answers are right in front of clients, they just need someone to help point them out.
A global surge in negative-yielding bonds is likely to bolster bitcoin’s appeal as an alternative investment over the long run, experts say.
The amount of global debt offering negative yields has more than doubled to $16.3 trillion in the past seven months to hit the highest level since April 2019, as noted by macro analyst Holger Zschaepitz.
In other words, currently, over $16 trillion in such bonds is guaranteed to incur losses if held till maturity.
With central banks buying bonds at a frantic pace to support the global economy, the tally of negative-yielding debt is heading toward a fresh record high above $17 trillion.
As such, the search for yield is likely to intensify, leading to increased rotation of money out of bonds and into perceived inflation hedges such as bitcoin, according to Stack Fund CEO Matthew Dibb.
“Going forward, the search for yield is likely to be a major driver of growth in bitcoin’s price and adoption,” Dibb told CoinDesk .
So far stocks have been the major benefactor of negative-yielding bonds, he added.
Economist and trader Alex Kruger told CoinDesk he expects the soaring negative-yielding debt to reignite bitcoin’s bull run once the uncertainty brought by the U.S. presidential election is out of the way.
The cryptocurrency has rallied by nearly 200% over the past seven months alongside the spike in the negative-yielding debt.
The period started with the “Black Thursday” markets crash on March 12. Year to date, bitcoin is up 58%.
The recent disclosures of bitcoin investments by companies like Stone Ridge Asset Management and payments company Square have boosted bitcoin’s appeal as an alternative asset.
While the broader outlook is bullish, in the short term, the cryptocurrency remains vulnerable to bouts of sell-off in the global equity markets.
At press time, bitcoin is changing hands near $11,300, representing a 1% decline on the day. Prices clocked a high of $11,723 earlier this week.
Stock markets, too, have come under pressure this week due to the resurgence of coronavirus across Europe and deadlock in Washington over additional fiscal stimulus.