BEYOND BITCOIN: OTHER CRYPTOS MIGHT BE FUN IN ‘21. Bitcoin continues to be a main object and a target for both investor and government scrutiny. In the last few weeks, it has traded wildly up and down. It caved from a high of around $58,000 to territory in the range of $43,000 after negative comments by Janet Yellin. But the anticipation of and passage of a $1.9 trillion stimulus, paid for with Central Bank IOU’s, helped Bitcoin to regain ground, back to within striking distance of its all-time high.
But blockchain currency enthusiasts shouldn’t just be focused on Bitcoin in 2021, according to InvestmentWatchBlog.com. In a recent article, they made the case for doing homework on other promising digital assets and technologies.
They noted that so far this year, a number of cryptos have outperformed Bitcoin. For example, Binance, a token used on the Binance Crypto Currency exchange, allows users to trade cryptos at a significant discount. Binance tokens have shot up over 700 percent in value so far in 2021. Dogecoin, a crypto Elon Musk tweeted favorably about, has also seen similar gains.
Innovative blockchain technologies that go beyond crypto tokens, including Stellar and Cardano, have also seen large gains. Here some digital players in the blockchain sphere that may be worth keeping track of in 2021:
Binance operates the Binance Exchange, one of the most widely used in the world (though some states in the U.S., including New York, bar trading on Binance due to the rights it preserves for traders). Binance has developed a Binance token that can be used as a method of payment for discount trading on the exchange.
Dogecoin’s origins might have been as a “meme” currency, championed mostly for reasons having little to do with its actual arguable value. But, perhaps thanks to its hard limit on the number of Dogecoins that can ever be created, the currency has continued to draw attention and investment activity.
Cardano represents potential uses of blockchain technology that go beyond uses as a digital currency. Designed by a consortium of engineers, mathematicians, and cryptographers, the Cardano technology can be used in solutions for supply chain interoperability, voter fraud, and legal contract tracing. Cardano has gained some notable investments lately.
Unlike Bitcoin, Polkadot rewards digital miners for holding on to their mined coins instead of selling. It does so by rewarding mining power according to the proportion of coins held by a minor, which disincentivizes their sale.
Steller is another technology that goes beyond retail production of digital currency, though it does have a digital coin, called Stellar Lumens. Stellar’s blockchain network is focused on connecting financial institutions around the world to each other, so they can almost instantaneously exchange currencies at very low transaction rates. The efficiency potential for the technology is enormous since it currently can take several days across many intermediaries to do what Stellar can accomplish in near real-time.
Other cryptos including Chainlink, Etherium, Tezos, and VeChain also made InvestmentBlog’s list of cryptos to watch in the coming year. One crypto that didn’t make the list, that investors should probably keep an eye on? Monero. It has perhaps the most extensive built-in privacy of any decentralized crypto on Earth.
JPMORGAN QUIETLY STEERS ACTION TOWARD BITCOIN. All the talking down of Bitcoin in February is looking less and less like an accident. JPMorgan, one of the world’s largest multinational investment banks, reportedly has been advising moves into Bitcoin since early March.
The firm has quietly told some of its clients to consider Bitcoin as a portfolio diversifier, according to Wolfie Zhao, writing for The Block.
The firm has distributed an educational deck of slides to clients of its wealth management service, to help them better assess the risks and potential benefits of Bitcoin and other crypto-assets.
One slide, titled “How others are valuing crypto?” detailed three common metrics used by market analysts, while suggesting “significant upside [of bitcoin] is possible.”
Despite the advice, the JPMorgan presentation also claimed a valuation of Bitcoin that was much lower than its current trading price. The deck’s authors also argued against viewing Bitcoin as a safe-haven asset similar to gold, at least for the time being.
“Bitcoin is not gold, nor do we think of it as such. When it comes to portfolio construction, it has diversifying properties like gold, but its volatility characteristics and correlation profile refute the comparison to the traditional safe-haven asset.”
The deck concludes that while Bitcoin shouldn’t be considered as a “protection asset,” it can diversify an investment portfolio:
“It’s difficult to conclude that outflows from gold are directly linked to inflows into Bitcoin. That said, Bitcoin doesn’t consistently trade like a protection asset or a substitute for gold. If anything in the near term, Bitcoin is more similar to a diversifying risky asset rather than protection akin to Treasuries and gold.”