On Friday, the Bank of England’s governor made a comment that was music to the ears of Bitcoin and crypto proponents.
According to reports from Reuters and Bloomberg, Mark Carney dropped a bombshell on a group fo central bankers and press at a meeting in Jackson Hole, Wyoming, stating that he believes that a Libra-like crypto asset is likely to replace the U.S. Dollar.
While he didn’t expound on the comment, he made it clear that the current system isn’t working in his eyes, saying that “in the longer term, we need to change the game”. Carney even explained that he believes the Dollar is playing a “destabilizing” role in the global economy.
Of course, this was not a recommendation to adopt Bitcoin, but it was an acknowledgment that traditional fiat monies are on their way out and digital assets are getting more and more viable.
Bullish for Bitcoin and Gold
According to Raoul Pal, the former head of Goldman Sachs’s hedge funds sales division and the chief executive of Real Vision, the implementation of a new monetary system is likely to be a boon for Bitcoin.
In a tweet published in the wake of Carney’s comment, the former Wall Streeter explained that while he doesn’t believe Libra will be the cryptocurrency to become the world’s next reserve currency, something similar will take its place.
The implementation of this system, he claims, will be “good for Bitcoin and gold”. In a sub-tweet, Pal further explained his thoughts, responding “exactly” to a comment claiming that a fiat digital asset will as an on-ramp for the cryptocurrency market.
Pal isn’t the first to have mentioned this theory. In a tweet, Jeremy Allaire, the chief executive of Circle, wrote that the launch of Libra (whitepaper) will be a “massive inflection point in [the] global adoption of cryptocurrency.”
It is important to note that this isn’t the only reason why the former Goldman Sachs executive is bullish on the leading cryptocurrency. As reported by NewsBTC previously, Pal claimed that today’s most popular asset classes make no sense for millenials with ten- to 20-year outlooks.
He claimed that with equities and real estate pushing extreme valuations, and bonds posting “virtually zero yields”, the best alternative is something like Bitcoin, which he believes will be the backbone of an alternative/parallel financial system.
Pal added that buying Bitcoin now is like buying bonds and equities in 1982, which is prior to the absurd asset inflation bubble that has inflated since then.
Altcoins, not Bitcoin will harbour more value by 2020, claims Bitcoin.com’s Stefan Rust
Roger Ver aka Bitcoin Jesus was in the news recently after he left his position as CEO of Bitcoin.com and appointed Stefan Rust, who was formerly the Global Head of Corporate and Business Development at the company. Bitcoin.com has also witnessed an array of developments of late, starting from the launch of its native cryptocurrency exchange to its recent partnership with HTC to add BCH support on HTC’s blockchain smartphone.
Newly-appointed CEO Stefan Rust addressed this partnership in a recent Ask Me Anything [AMA] session. Rust asserted that the collaboration has given the opportunity of having a bank on the HTC Exodus 1 smartphone. The blockchain smartphone will be pre-equipped with a wallet application and will be the first smartphone to support BCH. Rust added that the HTC partnership would stimulate the growth of BCH as a payment medium.
Several crypto-analysts have been vouching for a surge in the price of Bitcoin towards the end of this year. However, Rust believes that by 2020, there would be an increase in the adoption of other cryptocurrencies. He also asserted that more value would emerge from altcoins and not Bitcoin. He said,
“The main reason is if you are transacting building commercial services on chain, you are actually driving more value for the chain and ultimately building utility for that service, which people want to transact around in a trustless, borderless environment.”
Rust further highlighted the fact that altcoins are particularly attractive as they can be used across several fields.
Bitcoin.com’s David Shin had a while back said that the company is focusing on accelerating the market cap of BCH, while also revealing that the company is planning to launch a futures contract for the coin. Rust reiterated the same in his AMA, stating that the goals of the company revolve around pushing BCH into the top three of the world’s largest cryptocurrencies by market cap by next year.
Further, Rust spoke about the potential ban on cryptocurrencies by the United States. According to Rust, the United States would be at a “detriment,” if it banned crypto. He went on to highlight how innovation is paving the way to the creation of jobs, which is one of the most important necessities of any economy.
7 Hacks to Minimise Your Crypto Tax Liability
Have you had a great year with cryptocurrencies? Made the right trades at the right time and seen some hefty gains? Unfortunately, come tax season and the IRS is going to want a big chunk of your gains – they are already sending out warning letters!
Given that crypto trading hasn’t been around for too long, there isn’t a lot of clarity around crypto taxes and how they work. Yet, there are a few things that you can do today to minimize your tax liability in a big way. Here are some of the most important ones:
#1 Cut your losses before the year ends – or not
Let’s say you have made significant capital gains selling cryptocurrencies during the year. But you’re currently holding currencies whose value is extremely low. Selling these holdings will trigger a capital loss, and you can use those losses to offset other capital gains and even up to $3000 of ordinary income. You can also carry over remaining losses to the next year.
But what if you don’t actually want to sell your holdings but stay invested for the long term? A simple approach is to just buy back what you’ve sold after a few days. Luckily, cryptocurrencies are classified as “property” by the IRS, which means that the “Wash Sale Rule” that applies to stocks and securities doesn’t apply to cryptocurrency. The Wash Sale Rule prevents traders from offsetting capital gains if they repurchase an investment that was sold for a loss in the last 30 days. Since this doesn’t apply to cryptocurrencies, you can sell your holdings, book your losses, and then buy them back.
#2 Remember your trading fees, they pile up!
This one’s a no-brainer but still gets forgotten sometimes. Cryptocurrency trading fees are nothing but a cost to acquire the crypto, and are therefore treated as a fully tax-deductible. Transfer fees, on the other hand, are not directly related to the cost of acquiring the crypto. So ignore the transfer fees (which are relatively negligible anyway) but deduct all trading fees.
#3 Be a HODLer for at least a year
Holding cryptocurrencies for less than a year triggers short-term capital gains tax which end up being significantly higher than long-term capital gains tax. So it’s usually better to stay invested for a longer period of time.
Of course, you may argue that the volatile nature of cryptocurrencies means that gains are mostly realized over very short periods. A good way around this problem is to use instant crypto credit lines. These allow you to borrow against your crypto assets instead of having to sell them. So you get instant access to cash while staying invested in the long run and avoiding crypto taxes. The only thing to keep in mind is that such credit lines come with interest rates which are much lower than the tax rates but can pile up if you are borrowing long term – something to keep in mind.
#4 Buy crypto using your IRA or 401-K
If you use a retirement account to buy cryptocurrencies, all the capital gains generated from the transaction will come back to the account with tax deferred. In fact, in the case of a Roth IRA, there’ll be no tax liability at all. So you can keep investing in cryptocurrencies over a long period of time, without having to take out money to pay capital gains tax.
#5 Made gains in real estate and lost big on crypto? You are in luck.
It’s important to remember that your crypto capital gains can also be offset against other capital losses. So if you’ve had a bad run at the stock markets (which isn’t improbable, given that the MSCI world index actually went down 10.44% last year), you can use those losses to offset some of your capital gains and reduce your overall tax burden.
#6 Make the world a better place – give to charity!
If there’s some serious money at stake, Charitable Remainder Trusts (CRTs) are a tax planning vehicle that you can use to minimise your tax liability in a big way.
You need to create a CRT and then transfer your cryptocurrencies to the trust. The trustee will then sell the cryptocurrencies at full market value and then reinvest the proceeds from the sale into other income-generating assets. Not only do you not have to pay any capital gains when the asset is sold, but you will also receive a charitable deduction when you transfer the property to the trust. The trust pays you an annuity for the rest of your days, after which the remaining assets go to charity. So you reduce your tax liability and convert your cryptocurrencies into an income-generating asset!
#7 Record everything!
Failure to report crypto transactions can result in a penalty up to $250,000. Given that there are so many transactions taking place in the course of the year, calculating the amount of tax you owe can become complicated. That’s why it’s important to keep all your transactions in an excel file so that you can calculate the cost of purchase easily. If you don’t have perfect record-keeping, it might be a good idea to use crypto tax software that can help you consolidate the data and generate the documents you need.
The bottom line
Take proactive measures to minimize your crypto tax liability. Use these tips early in the financial year so that you can prepare yourself for tax season and keep most of your capital gains. If you are not sure how to prepare your tax returns, hire a competent crypto tax accountant. While this option may be expensive a good accountant can usually make up for the fees by saving you on taxes.
Bitcoin Price (BTC) At Clear Risk of Further Declines
- Bitcoin price failed to hold the key $10,300 and $10,250 support levels against the US Dollar.
- The price is currently trading with a bearish bias and recently tested the $10,000 support area.
- There is a key bearish trend line forming with resistance near $10,340 on the hourly chart of the BTC/USD pair (data feed from Kraken).
- The price is likely to revisit the $10,000 support level as long as it is below $10,400.
Bitcoin price is trading with an increased bearish bias against the US Dollar. BTC might accelerate its decline below $10,200 in the coming sessions.
Bitcoin Price Analysis
Yesterday, we discussed the importance of the $10,250 support for bitcoin against the US Dollar. The pair remained in a negative zone below the $10,400 resistance level and the 100 hourly simple moving average. As a result, there was a bearish reaction below the key $10,300 and $10,250 support levels. During the decline, there was a break below yesterday’s highlighted breakout pattern with support near $10,320 on the hourly chart of BTC/USD.
The decline gained pace below the $10,200 level. Moreover, the price spiked below $10,150 and tested the $10,000 support level. Recently, it recovered and climbed back above $10,300. However, the upward move was capped by the $10,350 level and the 100 hourly simple moving average. More importantly, there is a key bearish trend line forming with resistance near $10,340 on the same chart.
The pair is currently declining and is trading below the 23.6% Fib retracement level of the recent recovery from the $10,000 swing low to $10,348 high. On the downside, an immediate support is near the $10,175 level. It represents the 50% Fib retracement level of the recent recovery from the $10,000 swing low to $10,348 high. The main supports on the downside are near the $10,000 and $9,900 levels.
On the upside, there are many resistances near the $10,300, $10,350 and $10,400 levels. The main resistance is still near the $10,500 level. A successful break above the $10,400 level and a follow through above $10,500 is needed for upside acceleration in the near term.
Looking at the chart, bitcoin price is trading in a bearish zone below the $10,300 and $10,400 levels. Therefore, there is a risk of more downsides below $10,200. It seems like the price may perhaps revisit the $10,000 support. Additionally, if the bears remain in action, the price could test the key $9,900 support area.
Hourly MACD – The MACD is slowly moving into the bearish zone.
Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now below the 50 level, with a bearish angle.
Major Support Levels – $10,175 followed by $10,000.
Major Resistance Levels – $10,300, $10,340 and $10,400.