CoinIRA Blog

Stablecoin Meltdown: What Happened?

It’s been a blistering spring for the 300-million community of crypto investors. Bitcoin (BTC) has gone underneath $31,000, the popular stablecoin UST has plummeted much lower than its peg of $1, and its sister token Luna has sunk to a sad number of three decimal places against the U.S Dollar. So, how’s everyone dealing with the current crypto breakdown? Not my first rodeo, you’ll hear veteran HODLers say and try to keep their cool. Experts in the business field, on the other hand, are somewhat frustrated but hardly surprised — they predicted this crisis as a direct side effect of the unfavorable macroeconomic environment. But new investors might get discouraged thinking that Bitcoin’s heyday is over. However, Bitcoin and its fellow crypto coins have demonstrated a Phoenix-like power throughout the years and have risen from their ashes time and time again, so this time it shouldn't be any different, right? Well, before jumping to any conclusion on the next crypto pitch — upwards or downwards, let's go through the main reasons for this crisis in the global crypto market. Starting with stablecoins!

What Are Stablecoins?

Stablecoins are a separate class of digital assets that came along with a clearly defined purpose to soften the volatility in the crypto trading arena. Similar to Bitcoin and other cryptocurrencies, stablecoins reside on the blockchain, but their supply isn’t controlled by any consensus mechanism. Instead, stablecoins work with a centralized company in the back, which doesn’t limit their supply but must sustain the production of each newly-minted coin by adding another asset to a specific fund reserve. The backup asset is usually a fiat currency, such as USD, but it can also be a commodity like gold or even another cryptocurrency For that reason, we say that stablecoins are pegged to a single unit of another asset in a 1:1 ratio. So, the stablecoins’ price can’t explode and plummet as a result of the public mood. If they’re tethered to USD, their market value is 1 USD sharp or an amount around 1 USD. Being a border case between fiat and crypto, stablecoins are raising governments' scrutiny since the company running the stablecoin doesn’t usually let the backup fund rest in a bank account but invests it in other dynamic businesses for profit. Technically, this isn’t illegal, but it means that the company doesn’t maintain the necessary liquidity at all times, and hence, stablecoins have no value at all. However, they have turned out to be the moving force in the crypto trading industry. Stablecoins have made the crypto scene a more flexible ecosystem, which wasn’t possible with fiat currencies because of the slow and expensive crypto-to-fiat transfers. For example, the most popular stablecoin, Tether (USDT), is the third crypto by market cap and, believe it or not, the first in trading volume according to CoinMarketCap. However, remember that stablecoins aren’t a suitable investment material for HODLers and crypto-saving accounts since price booms aren’t on their agenda. Now let’s find out how Luna and UST made a plot twist in this stablecoin story.

The Collapse of Terra (Luna) and TerraUSD (UST)

The volatility of crypto-assets hasn’t been uncommon in the short but eventful crypto history. However, much of 2022 had been oddly quiet for the cryptocurrency market, and it stayed like that until one of the best-ranked stablecoins lost its stability. Out of the 100 circulating stablecoins, very few use algorithms as a backup instead of a tangible asset. Run by Terraform Labs company, UST is one of these algorithmic stablecoins that utilizes complex code combinations and LUNA to maintain continuous stability. More precisely, every time a UST token is generated, LUNA tokens of the amount of $1 are burnt and vice versa. This allowed UST holders to sell their coins in exchange for $1 of Luna, with a slight profit every time there was a threat for UST deppeging — going below the $1 standard. Since its launch in 2019, Luna has been a well-performing token with a steady rise and high rank on all relevant crypto charts. However, once the bearish climate started discouraging investors on a global scale, they started massively selling out their UST coins, which caused lethal inflation and devaluation of Luna. For illustration, at the beginning of 2022, there were 345 million units of existing LUNA tokens, and this number drastically jumped to 3.47 billion on May 12, only to hit an unbelievable 6.5 trillion units of Luna the very next day. Ironically, LFG (Luna Foundation Guard), the company responsible for adding collateral supply to maintain the UST peg, presented a recovery package whereby the foundation purchased a huge amount of bitcoins to be added to the treasury reserve, thus keeping UST alive. However,  this was only a short-term plan executed at the wrong time — in May 2022, BTC wasn’t doing well on global markets, which led to additional negative outcomes for LFG. Eventually, major cryptocurrencies like Bitcoin and Ethereum are bouncing back, leaving Luna as collateral damage in this market mess. Three days after the black May 12 (1 BTC = 28,000 USD), Bitcoin’s price rose by nearly 10%, while Luna ended up delisted from all dominant crypto exchanges.

Macroeconomic Factors

In the spring of 2022, the world faced interest rate rambles, rising inflation, and political instability due to the Russian-Ukraine war. This series of events triggered critical alerts among some investors that inflation in the post-pandemic era could impact global business development, including virtual assets. Interestingly, Bitcoin was designed to serve as a hedge against inflation on the market, but figures show that it didn’t stay immune to the painful shafts happening right now. From a psychological point of view, the general atmosphere tends to discourage investors from expanding their virtual portfolios amid insatiable times. However, experts didn’t change their estimations for Bitcoin’s future because of the momentary crisis. For example, Caleb Franzen, a market analyst for the world-renowned Cubic Analytics, asserts that Bitcoin will keep serving as an inflationary hedge in the years to come, despite the very close correlation between crypto and the traditional stock market.

The Bottom Line

There is no straightforward answer to explain the current crypto plunge — all listed factors contribute to building the public image as a driving force in establishing the prices of the circulating cryptocurrencies. The latest LUNA/UST debacle shows that we need a tighter framework for regulating stablecoins. Otherwise, they can easily take the Ponzi route without regular checkups and hence, negatively impact the upward growth of established cryptocurrencies like Bitcoin, Ethereum, Litecoin (LTC), ZCash (ZEC), and Stellar (XML). As for macroeconomic factors, we can’t control them, but we can definitely use them to our advantage. Bearish spells are the optimal time for buying stocks or cryptos as attractive financial instruments at a low price. For all other crypto-related questions, you can reach out directly to our Coin IRA team. They may be able to offer you some insight on current market conditions so you can decide what your best options are based on your risk tolerance and personal financial goals.

Coin IRA Announces New Cryptocurrency Self-Trading Platform

Coin IRA has been helping its customers establish Cryptocurrency IRAs since April 11, 2017.  As we approach our 5 year anniversary, we're excited to announce the launch of our new Digital Asset Self-Trading Platform where our new and existing customers can SELF-TRADE cryptocurrencies inside their Cryptocurrency IRAs and also establish Individual NON-IRA Trading accounts -- with NO fees for setup, maintenance, or cold storage.

With our partner, Equity Trust Company, as custodian for both types of accounts, customers can invest with confidence knowing their digital assets are held by an industry leading IRS approved custodian with over 40 years of experience and $34B in assets under custody.  All digital assets custodied by Equity are held in cold storage and insured against internal and external theft, physical loss and destruction, at no additional charge.

Choose the type of account you're opening, IRA or Individual.

You can set up your new Cryptocurrency IRA or Individual Custody Account in less than 5 minutes, and say goodbye to Coinbase and other platforms that complicate and limit your funds transfers and trading options.  Fund your IRA with a transfer from an existing IRA or rollover from an eligible 401k (or other employer sponsored plan), and easily fund your Individual Non-IRA Custody Account for the exact amount you want to trade without limitation or delay, by wire, ACH or check directly from your checking or savings account.

With our platform's clear step-by-step instructions, customers can easily navigate the setup, funding and trading process themselves, but as always, Coin IRA's Cryptocurrency Specialists are available to provide a guided experience from start to finish.  With no account fees and some of the lowest transaction fees in the industry, Coin IRA's commitment to its customers has reached a whole new level of customization and convenience!

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Ethereum cryptocurrency

How Many Ethereum Are There?

Cryptocurrency Individual Retirement Accounts (IRAs) are becoming increasingly popular thanks to the rapidly rising adoption rate of top cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). As the world’s first cryptocurrency, BTC has so far been the primary choice for crypto IRAs, but this is gradually starting to change. While BTC is strictly used as digital cash, Ethereum offers more versatility from a development perspective because it is a multipurpose cryptocurrency. The Ethereum blockchain is one of the largest crypto ecosystems on the market, with thousands of decentralized apps, DeFi platforms, and crypto tokens based on the ETH network. Crypto enthusiasts exploring crypto IRAs should definitely pay attention to Ethereum as a viable option to include in their IRA. Let’s take a detailed look at Ethereum to help you understand all the key characteristics of one of the most valuable cryptocurrencies on the market.

A Brief History of Ethereum

The Ethereum blockchain was launched back in 2015 by a team of crypto veterans and blockchain developers led by programmer Vitalik Buterin. The idea behind Ethereum was to create an open-source, nonprofit blockchain that provides users with much more than just digital cash services like Bitcoin and Litecoin (LTC). Instead, the Ethereum blockchain aims to provide developers with programming tools and resources for launching different kinds of tokens and platforms, such as DeFi apps, exchange platforms, staking protocols, crypto games, NFTs, and virtual marketplaces. The ecosystem was powered by the Ether token, which is used to facilitate all transactions on the ETH blockchain. The project was an immediate hit, as there weren’t any similar crypto projects on the market at the time of its launch. Other altcoins were mostly copying Bitcoin by providing virtual cash functionalities. Ethereum went much further by giving real problem-solving features to cryptocurrency and providing developers with free tech tools for developing platforms.

How Does the Ethereum Blockchain Work?

The ETH blockchain is a Proof of Work (PoW) blockchain, similar to Bitcoin in its basics. This means that the blockchain is fully decentralized, without any single authority or central server responsible for validating network traffic. Instead, all transactions are checked and validated by independent network nodes, i.e. Ethereum miners and their computers. Every transaction needs to undergo a rigorous validation process that requires miners to use their rigs’ hashing power to find the right hash for each transaction. When miners find the right hash, they present it to the whole network as proof of work and wait for additional confirmations before they add it to the next block of the ETH blockchain. This process consumes a lot of time and computing power, which is why miners earn a block reward of freshly mined ETH coins.

Ethereum’s Main Features

Smart Contracts

One of the revolutionary features of the ETH blockchain is the smart contract, self-executing, automated pieces of computing code that are created in order to perform certain tasks without the need for human supervision or participation. For example, a company can use smart contracts to automate the salary payout procedure for their employees, or a crypto exchange can use these contracts to enable trustless transactions between complete strangers. A smart contract operates on the basis of safe locks that make sure both parties need to fulfill their end of the deal before they can get the agreed-upon results. This way, when two strangers agree on an exchange of assets, both sides need to deposit the agreed amount of funds before they can get their share of the deal.

Decentralized Applications

Decentralized applications are the main utility of the Ethereum blockchain; however, without smart contracts, developers wouldn’t be able to create and launch dApps. These applications don’t use developer resources from centralized big tech companies that control all apps and platforms launched with their programming tools. Instead, Ethereum-based dApps are built with the help of the Ethereum programming language called Solidity and the Ethereum Virtual Machine (EVM). DApps can be launched for all types of businesses and entertainment purposes, from decentralized exchange platforms like Uniswap (UNI) and DeFi protocols like Curve to NFT marketplaces like OpenSea and crypto games such as Axie Infinity (AXS).

Ethereum Tokens

Developer teams that want to quickly launch their own cryptocurrency as part of their dApp or DeFi ecosystem don’t need to create a whole blockchain from scratch. They can always use the Ethereum chain to launch a crypto token, thanks to the ERC-20 token standard. This token standard includes a set of rules and parameters for launching cryptocurrencies based on the ETH network, and it’s totally free. Anyone with some programming knowledge and a solid project can launch their crypto as an ERC-20 token. This was one of the most innovative features of the ETH blockchain when it was launched because before Ethereum developers had to either create a whole blockchain from scratch or fork an existing chain like the BTC network. Another very important Ethereum token standard is the ERC-721 standard, which is the token standard for non-fungible tokens (NFTs) built on the Ethereum chain. The ERC-721 standard paved the way for key NFT marketplaces like OpenSea and played a key role in the popularization of NFTs, which are exponentially growing in terms of popularity and adoption rate.

So, How Many Ethereum Are There?

Now that we’ve laid out the key characteristics of the Ethereum blockchain, let’s take a look at the numbers behind the Ethereum ecosystem.

Ethereum Supply

Ethereum is PoW-based crypto that’s going through a transition process to a Proof of Stake model where mining won’t be possible anymore. Until then, the Ethereum supply is constantly on the rise thanks to miners. The easiest way to monitor the current supply of ETH coins, along with the Ether price and market capitalization, is through the Ethereum page on Coinmarketcap. The circulating supply of Ethereum is well over 100 million coins, and the number is constantly increasing. There isn’t any ETH hard cap that regulates the maximum amount of coins, unlike Bitcoin, which is capped at 21 million coins.

Ethereum’s Performance in 2021

Ethereum’s GAS fees are known to be some of the highest on the crypto market, and this didn’t change for the better in 2021. In fact, Ethereum fees have only gone up thanks to the high influx of new ETH chain users. The fees are especially high during periods of high traffic when users compete with each other in so-called gas wars by setting exponentially higher transaction fees to get their transfer processed as fast as possible. The trend of sky-high gas fees is especially visible on the NFT market, which is dominated by Ethereum and received a huge increase in market cap during 2021. Around 41 billion USD worth of ETH was transferred in NFT related transactions. In terms of price action, 2021 was the best year so far for Ethereum since the coin managed to reach a new all-time high of 4,891 US dollars per coin. Although new dApp and smart contract centered blockchains like Solana (SOL) and Avalanche (AVAX) are becoming increasingly popular, Ethereum is still firmly dominating the market when it comes to smart blockchain networks with high interoperability features. Ethereum managed to constantly hold over 15% of the total crypto market cap throughout 2021, while the Ethereum mining figures remained within the optimal 18 million Ether annual amount.

A Few Ending Words…

The information about Ethereum presented in this post aims to provide you with relevant knowledge about the second-largest crypto on the market in order to enable you to make your own decisions on whether you want to include ETH in your IRA or not. If this article peaks your interest in exploring Ethereum IRA options, feel free to contact one of our Coin IRA crypto specialists at 888-998-COIN.

What is the Next Bitcoin?

What a time for early Bitcoin traders! Did anyone foresee this blooming outcome in 2009? Is this a sign that we should invest in other prospective cryptocurrencies and wait for their golden days? No single answer is convincing enough as this is the first time for a blockchain-based asset to conquer the investment community. Based on the current events, only two things can be taken for granted: first, the world is permanently moving towards the digital ecosystem; and second, there’s room for new digital currencies to rock the world’s economy. In this article, we’ll start off with a brief history of Bitcoin and its way to the throne. With its rise in mind, we will discuss what criteria signal a “big” cryptocurrency. In the end, we’ll list the top three potential Bitcoin successors you should take into consideration.

The History of Bitcoin’s Price

Although we still call Bitcoin “the new currency,” its history dates back to 2009, when the mysterious Satoshi Nakamoto introduced the world to a new trading concept by posting a link to a white paper called "Bitcoin: A Peer-to-Peer Electronic Cash System." Bitcoin’s first price increase was noted in 2010 when a single Bitcoin reached the price of $0.08. Following a rough road, early Bitcoin traders faced an exhaustingly volatile market with daily fluctuations and a series of scams and frauds resulting from the lack of regulations. In April 2011, the Bitcoin price jumped by 3,200% reaching an amount of $32 only to sink to a $2 bottom price by November that same year. In the following years, the price of Bitcoin continued to oscillate with rapid jumps in the range between $4 to $1,200. By that time, the innovative digital market had caught the eye of many enthusiasts, experienced traders, and regular folks who wanted a fresh field to invest their capital in. In November 2017, Bitcoin hit an amazing price of $20,000, followed by a drastic price drop to $7,000 the very same year. The pandemic outbreak in early 2020 was the reason for the skyrocketing of Bitcoin’s value as the mainstream economy faced devastating losses. At the moment of writing this article, one Bitcoin is worth over $50k. However, the golden era of Bitcoin isn’t over yet. At this point, we can’t predict its further development even though financial experts try to “sell” diametrically opposite opinions. Meanwhile, it’s time we considered other promising altcoins. How can we know they’re worthy of our attention?

What Are the Features of the New Bitcoin?

Bitcoin is the pioneer but it isn’t alone on the digital frontier. There are over 8,000 active altcoins with an aggregate value of approximately $1.5 trillion, which is 40% of the total crypto trading volume. However, a great number of the upcoming cryptocurrencies have a short life-cycle and despite the first-class marketing and management behind them, they don’t succeed in maintaining the image of reputable cryptocurrency, so they fade out soon. On the other hand, we have a handful of success stories about cryptocurrencies on their way to becoming credible competitors to Bitcoin. Let’s outline what factors make the difference, apart from the inevitable market volatility.

Usefulness and Purpose

It’s an unmistakable rule that the demand for a particular altcoin will rise if people find it useful and believe in its purpose. At this point, there are a great number of cryptocurrencies on the market that meet all criteria for a valuable coin, but they lack a certain purpose. If users can’t find the purchase of a particular coin meaningful enough, that’s a clear sign the altcoin won’t last long.

Supply

The blockchain industry is based on a predefined maximum supply of coins and this is a solid test of whether a certain coin will have a bright future. If traders haven’t lost interest by the time the maximum or near-maximum has been reached, there’s a good chance that the cryptocurrency’s price will rise.

Current Price and Trading Volume

The price and other relevant information about each cryptocurrency are easily accessible online today. A deep analysis and research on its current market position can be the key factor in deciding on your next investment. Nonetheless, as you already know, there is no guarantee that the market won’t change direction tomorrow.

Easy and Fast Access

An appealing feature of a promising cryptocurrency is easy and fast access. This doesn’t mean that the cryptocurrency is cheap. Rather, a cryptocurrency that’s easy to reach should be available on the most reputable exchanges and other popular crypto trading services. This is a sign that it’s being managed effectively and seriously considered by experienced traders.

The Top 3 Cryptocurrencies Which Could Be the Next Bitcoin

Ethereum, Litecoin, and Stellar make up our top 3 cryptocurrencies that could be the next Bitcoin. Let’s take a deeper look into their basic traits.

Ethereum (ETH)

We mentioned that the purpose behind each cryptocurrency is what attracts potential traders most. Ethereum is based on a strong one: decentralizing the internet by substituting the existing servers with “one computer for the entire world,” accessible everywhere to everyone. Ethereum is, in fact, an open-source blockchain software that supports Ether, a coin placed right behind Bitcoin, worth over $139 billion. In simpler words, all Ethereum-linked programs require a certain amount of computing power. Ether is the asset you pay for this power. A remarkable number of 730k active traders see long-term potential in this innovative blockchain concept as it tends to offer its users greater control over funds and online data since Ethereum began in 2015.

Litecoin (LTC)

Litecoin is one of the cryptocurrencies with the longest tradition, founded in 2011 by former Google engineer Charles Lee. It seems to be an upgraded Bitcoin version in all aspects: lower costs, fast payments on its network, higher supply of coins, etc. Unlike Bitcoin and Ethereum, Litecoin didn’t reach a price spike in 2020 despite its exceptional technical strengths. However, it has achieved remarkable credibility and trust among experienced crypto-traders, which makes Litecoin one of the most serious candidates for the title of “the next Bitcoin.”

Stellar (XLM)

Stellar is an open blockchain network with a clear and meaningful vision. It provides practical and efficient business solutions to institutions and individuals. The most distinguishing feature of Stellar is its fascinating payment network speed for processing large transactions. One of the biggest drawbacks of traditional banking networks is the amount of time they take to process, approve, and settle high-net international transactions. Stellar does the same in no time. Their only condition is its native Lumens (XLM) coin to be supported on the respected network. Stellar’s platform is intuitive and easy to navigate. It is similar to modern payment processors like PayPal - the transaction process can be immediately initiated once you deposit funds on the network. To be clear, Stellar’s goal is to become the future of international payments, not necessarily Bitcoin’s successor. However, it’s worth taking XLM into account as your potential investment since its innovative approach is yet to be fully recognized. And since anything is possible in the crypto space, Stellar can also possibly be the next Bitcoin.

Final Thoughts

We hope that our blog post broadened your knowledge beyond Bitcoin as a single source for investing in digital assets. If you’ve decided to take action before another cryptocurrency makes headlines worldwide, get started by contacting Coin IRA. Their experienced cryptocurrency sales specialist will show you detailed crypto opportunities and the best practices for investing your savings wisely.
Man Looking at Investment

Bitcoin vs Stocks: Where Should You Invest Your Money?

At some point in each of our lives there comes a time when we consider how best to invest our savings. No matter how little money you have, it's never too early—or too late—to start putting that money to work. Whether it's a simple pension fund, an IRA, or a mixed bag of stocks and assets, your money will almost always provide better returns when invested. However, investment opportunities change over time due to a multitude of factors including political, technological, and cultural trends. Savvy investors keep an eye on developing markets and continuously diversify their portfolios to accommodate the current climate. The most recent disruptor to hit the financial world in this way is Bitcoin, a new type of digital investment that is taking the world by storm. Bitcoin is part of a new class of assets known as cryptocurrencies which store monetary value securely in a digital format. Even though these assets don't have a physical form, they maintain value through advanced technology that ensures their scarcity and keeps them secure.

How Cryptocurrency Differs from Traditional Stocks

If you aren't well versed in the technology and fundamentals of cryptocurrencies, it’s easy to think of them in the same way as other assets like stocks or bonds. However, behind the scenes, cryptocurrencies function in a vastly different way to stocks, especially Bitcoin. Despite being intended as digital money, Bitcoin has evolved to act more like digital gold than a currency. In this way, it acts differently to both stocks and foreign exchange. Whereas a stock price is linked directly to the performance of the company, Bitcoin has no shareholders, no CEO, and is not linked to any country or government. This puts it in a league of its own—an entirely unique method of safely storing and transferring value with no need for a broker, bank, or third-party intermediary. Traditional investors may find this lack of intermediation unsettling but it has many advantages. Like gold, Bitcoin is immune to inflationary practices that damage fiat currency or insider trading that can damage the value of a company. Bitcoin offers all the same 'hard money' benefits of gold but in a more secure, easily transferable digital format. Nowadays, you can buy cryptocurrency with a variety of methods: either directly from a seller, on an exchange, through an investment fund, or as part of a product like an IRA. Thousands of financial institutions are beginning to offer cryptocurrency investments to their customers so they can benefit from this burgeoning new asset class.

Key Differences Between Stocks and Crypto

  • Hours: Cryptocurrency trades 24/7, 365 days a year, unlike stock markets which keep office hours.
  • Regulation: Stocks are regulated by government agencies, cryptocurrencies are secured by blockchain technology.
  • Volatility: Cryptocurrencies are typically more volatile than most stocks.
  • Ownership: Stocks remain tied to a company whereas with cryptocurrency you take full ownership and responsibility of the asset.

How Does Digital Currency Work?

Digital currencies like Bitcoin are recorded on a transparent and immutable ledger technology called a blockchain. In the same way that a bank keeps a record of your savings on its computers, Bitcoin keeps a record of your investment on the blockchain. However, unlike a bank that can run out of cash reserves, the exact amount of Bitcoin that you own is always available to you. There is only 21 million Bitcoin available and it's impossible to create more, so Bitcoin will never lose value due to inflation. Once all the Bitcoin available has been issued, its scarcity will ensure it continues to hold increasingly high value. Other cryptocurrencies use similar or equivalent methods of supply control to protect against rampant, uncontrolled printing that results in endless inflation. Due to the large choice on offer, many people are unsure which crypto to buy. Generally, the best way to judge a reliable crypto asset is to see how long it has been running. Bitcoin, Ethereum, and Litecoin have all been around for many years, proving themselves as reliable investments. Unlike some new crypto coins that may die after one year, these coins show strong promise as a safe, long-term investment.

Key Bitcoin Statistics

  • 11 years of secure operation
  • Limited to 21 million coins
  • US$1 trillion market valuation
  • 408.8 percent mean annual return

Why Both Bitcoin and Stocks Make a Good Investment

As you can see, cryptocurrency and traditional stocks offer very different investment opportunities. There are advantages and disadvantages to both asset classes, which is why it's always best to diversify your portfolio in a balanced way. Investing a percentage of your money into Bitcoin and stocks will ensure you don't miss out on the great returns of cryptocurrency while maintaining a secure long-term stock position. Statistically, Bitcoin offers the best returns of any asset over the past decade but the technology is still relatively new and lacks strong regulation. It may still take some time for governments to develop effective regulatory policies in the cryptocurrency sector, assuring traditional investors that cryptocurrency is safe. Stocks, on the other hand, have a long history of profitable and safe investment opportunities. If you do your research, keep an eye on emerging trends, and pick good stocks, you can be assured a decent return on investment (ROI). Companies like Apple, Amazon, and Microsoft have proven excellent long-term investments, although for each one there was also a promising company that has failed.

Should You Buy Cryptocurrency? Diversification is Key

Whatever you choose to invest in, always remember that diversification is key to ensuring your portfolio always stays in profit. No single asset or asset class is immune to losses, so make sure you don’t put all your eggs in one basket. A good investment portfolio should include a well-balanced mix of stocks, precious metals, and cryptocurrencies. For this reason, many people choose to invest in both stocks and a cryptocurrency product like an IRA, helping to protect against any single failure. Investing in a mix of cryptocurrencies and stocks can provide an extra level of protection, balancing out any losses against gains and providing a stable ROI.  
IRA Piggybank calculator

How Does a Cryptocurrency IRA work?

An Introduction to IRA accounts

An individual retirement account (IRA) is one of the most popular ways to save for retirement giving you some of the best tax-saving benefits. Many savvy investors will begin contributing to an IRA as soon as they start working and earning income to complement their employee-sponsored 401k retirement account, or to plan early for their retirement when their employer does not have a 401k or other employer-sponsored plan.  You can also choose what to invest your IRA money in, from commonly held stocks, mutual funds, and other equities, to real estate, cryptocurrency, and other digital assets. IRAs provide several advantages over a typical savings account, most notably tax savings and diversified investment options.  For example, depending on your income level, you can get up to 100% tax savings on contributions made to a Traditional IRA. A Roth IRA is funded with after-tax dollars and grows tax-free, while a SEP IRA, a Simplified Employee Pension, has its own advantages for those who are self-employed or own a business, one of which is higher annual contribution limits than a Traditional or Roth IRA account.

What is a Cryptocurrency IRA?

A Cryptocurrency IRA describes an IRA where the investment of choice is any digital currency, including Bitcoin.  In 2018, the IRS defined cryptocurrencies as “property” rather than securities. This change made it possible for institutions to start offering cryptocurrency as an investment in a Self-Directed IRA. Cryptocurrency IRAs offer the option of a single cryptocurrency or a mix of carefully selected, eligible cryptocurrencies for a more diversified crypto portfolio. As with any IRA, your custodian must hold the assets. Bitcoin is the most popular choice for a Cryptocurrency IRA, because it has been around the longest and proven to be the most widely accepted. However, over the years, other cryptocurrencies such as Ethereum and Litecoin have also proven to be stable and profitable. Many Cryptocurrency IRA custodians offer a narrow range of digital assets to choose from if you wish to diversify beyond just Bitcoin, avoiding the riskier altcoins.

The Difference Between a Conventional IRA and a Cryptocurrency IRA

Cryptocurrency IRAs must adhere to all the same IRS guidelines as conventional IRAs according to the type of IRA it is (Traditional, Roth, SEP). This includes transfer eligibility, contributions, distributions, and taxable events.  In addition, IRS code dictates that all IRA assets must be held by a trustee or custodian. A custodian is the financial institution that is responsible to not only safeguard your investments but also to report any contributions and distributions to the IRS.  Because the IRS categorizes cryptocurrency as property and not a security, only a self-directed IRA that allows the account holder to invest in alternative assets can facilitate an investment in cryptocurrency. A Cryptocurrency IRA is simply a Self-Directed IRA that can invest in cryptocurrency. With a Self-Directed IRA, you, as the IRA account holder, choose how and when your IRA funds are invested - in this case, crypto rather than stocks, bonds, and mutual funds. However, not all Self-Directed IRA custodians have the capability of offering cryptocurrency as an alternative investment option, since they have very specific trading, tracking, and storage requirements.   

What Cryptocurrencies are eligible to be placed in IRAs?

The oldest and most popular cryptocurrency is Bitcoin, well known around the world for the incredible growth it has enjoyed over the past decade. Nowadays, there are over a thousand cryptocurrencies, but only a select few are eligible for IRA investment. Each custodian who offers cryptocurrency as an option determines which ones are eligible for their account holders. As Bitcoin gains institutional and individual acceptance, more and more investors are choosing Bitcoin and other cryptocurrencies as an IRA investment option. 

But is cryptocurrency safe?

Over the past decade, Bitcoin has become known for both its rapid growth and decline, prompting many to ask - is Bitcoin a good investment? Is it a stable investment? After all, we have seen cryptocurrencies move up or down in value by as much as ten or twenty percent in a day. These seemingly unpredictable and rapid swings make traditional investors wary and give the impression of an unstable investment. Bitcoin’s volatility during these times increased its implied risk.  While its acceptance was still in question, analysts struggled to determine what were the driving forces behind these market gyrations. However, Bitcoin has shown consistent growth with a mean annual return of 408.8% over the past decade.  Recently, however, Bitcoin has attracted the attention and acceptance of financial institutions like Microstrategy and tech giants like Tesla, both having invested billions of dollars into digital currency. These firms, along with many others, see Bitcoin as a hedge against inflation, similar to the way investors viewed gold during previous times of economic uncertainty. This type of large-scale corporate investment validates the legitimacy of Bitcoin and gives it more stability in the long run.

Get your own Cryptocurrency IRA today from Coin IRA

Coin IRA and its preferred custodians provide qualified Cryptocurrency IRAs helping thousands of customers enjoy the benefits of this new and exciting asset class.  Our highly-qualified consultants will help you choose from a range of options, including Bitcoin, Ethereum, and Litecoin with no maximum purchase limit. Investing in cryptocurrency opens you up to a modern asset class that has out-performed every other asset in the past decade.  Furthermore, it allows you to maximize the diversification in your investment portfolio, mitigating risk and hedging other markets.      Speak to a Coin IRA Cryptocurrency Specialist today about how you can better secure your retirement with a Cryptocurrency IRA. Our team will expertly and efficiently guide you through the process from start to finish.  It's easier than you might think.
Single bitcoin next to stack of bitcoins with rising graph in the background

Where is Bitcoin Heading in 2021?

A great year for Bitcoin

While most of us found 2020 to be a difficult and confusing year, Bitcoin enjoyed a period of strong growth throughout the year. Things started off a bit rocky when the COVID-19 pandemic caused financial markets worldwide to crash, sending Bitcoin to a 12-month low. However, by May, it had made a full recovery and continued to grow, registering a new record high price by year-end.

Coming into 2021, Bitcoin has faced some mild volatility but continues to move in an upward direction. After breaking above $30,000 in early January, it quickly reached $40,000 before running out of steam and cooling off for a period. Most recently, a renewed rally has seen the leading cryptocurrency break through the significant $50,000 mark.

What to expect in 2021?

The unexpectedly strong growth over the past few months has left many analysts wondering what we can expect to see from Bitcoin in 2021. There are several important factors to consider that are likely to affect the price, some that stem from historical movements and some with more immediate ramifications. In order to accurately assess the direction in which Bitcoin is headed, we need to investigate three core elements that define its price: public perception, institutional investment, and the underlying technology.

Public Perception

Public perception is one of the most critical factors driving the price of any asset. In the case of traditional company stocks, the reputation of the company can make or break public perception. In the case of Bitcoin, there is no easily definable product, service, or use case backing the asset. Digital assets like Bitcoin lack a physical product, so their value is largely derived from whether or not people believe it has value.  In the past, Bitcoin has received criticism from conservative financial groups who didn't take the time to understand the technology and couldn't see where the value came from.

More recently, however, big names in the fintech world are realizing the incredible use cases of cryptocurrencies, helping to drive a wider understanding of their importance. Equally, government regulators have begun to act more favorably towards cryptocurrencies, helping to improve their public image. People from all walks of life are finally beginning to see cryptocurrency as an investment for the future.

Institutional Investment

When it comes to money, the average person tends to trust their bank or financial advisor more than themselves or their friends. For cryptocurrencies to find a truly lasting foothold within the global economic landscape, acceptance by established financial institutions is paramount.

Over the years, Bitcoin has enjoyed a modicum of support from some high-profile analysts like Thomas Lee of Fundstrat Global Advisors. With 25 years of equity research experience, Lee has long touted Bitcoin's value, recently predicting even stronger performance this year than in 2020. Overall, the sentiment is high, and the vast majority of analysts see further growth for Bitcoin in the medium to long term. 

Over the past few months, institutional investment into the crypto market has exploded, with major tech and finance firms like Paypal, Tesla, Greyscale, and Microstrategy all buying up massive amounts of Bitcoin. These companies have taken the time to research whether Bitcoin is a good investment, evaluating risk, and making a calculated decision - they're not the type of firms to make speculative bets!

Underlying Technology

Those who truly understand Bitcoin usually have a basic understanding of blockchain, the underlying technology that makes cryptocurrencies entirely different from any other asset class. Blockchain is a highly secure ledger of transactions maintained by a decentralized network of computers that can be programmed to control the supply and demand of a digital asset.

Historically, Bitcoin has enjoyed strong periods of growth following a change to the network that ensures scarcity. Known as a 'halvening,' this hard-coded event occurs approximately every four years and halves the amount of Bitcoin that is created daily. The third and most recent halvening occurred on May 11th, 2020, putting us currently in the midst of a growth cycle.

Unlike traditional currencies or assets, Bitcoin has a supply cap of 21 million units and follows a release schedule of increasing scarcity that nobody can ever tamper with. Many financial experts believe this baked-in scarcity model is what gives Bitcoin its exceptional value and long-term viability. 

During times of financial uncertainty, many governments print money in large quantities to inject stimulus into the economy, resulting in rapid inflation and damage to the value of the currency. Bitcoin's carefully controlled scarcity and immunity to oversupply make it an excellent hedge against periods of inflation, leading many analysts to compare it to gold.

Is cryptocurrency safe?

Despite their exceptional long-term growth and widespread acceptance by top institutions, many people remain fearful of cryptocurrencies. This is largely due to a negative image painted by conservative economists and a fear-mongering media that doesn't understand the technology. In reality, Bitcoin is designed to make it one of the most secure monetary networks in the world. 

The decentralized, transparent, and immutable nature of blockchain technology makes it near impenetrable to theft or fraud. In fact, in over 11 years, the core Bitcoin network itself has never suffered a hack, theft, or data breach. However, when interacting with any blockchain network, there are some inherent dangers that could occur as a result of human error. 

This is why the majority of users enlist the help of a third-party company when they want to buy and sell crypto. If done through a trusted third-party, there is no reason why you should have any trouble dealing in cryptocurrency. Yes, fluctuating market conditions mean you could lose money trading cryptocurrencies, but this is no different from any other asset class.

The benefits of a cryptocurrency IRA

If you're looking to diversify your retirement portfolio into an asset with a high potential for profit, a Cryptocurrency IRA could be the ideal product for you. The traditional stock market is facing a tough time at the moment as economic uncertainty shakes confidence globally. Precious metals traditionally offer a safe hedge against this situation but historically provide only mild returns.

Diversifying a portion of your IRA into Bitcoin will expose you to the incredible potential that this new asset class has to offer. The expert advisors at Coin IRA can help guide you through each and every step of opening a cryptocurrency IRA. It's a small decision that can make a big difference!

When to Buy Bitcoin?

Bitcoin is changing the world, and those who know its value and its numerous benefits have already started investing in it. Even though Bitcoin's market is volatile, if you understand the basics of how the market works and keep an eye out for upcoming price movements, you'll lower the risk of potential losses. As Bitcoin continues to have an impressive bull run in 2021, many who want to jump onto the crypto bandwagon are wondering when to buy Bitcoin and whether or not 2021 is the right year to do so. If you are seeking an answer to this question as well, this article will come in handy. We’ll discuss when to buy Bitcoin, briefly go over the history of Bitcoin’s price, and provide you with a short overview of the macroeconomic climate. Finally, we’ll list some predictions on how the price of Bitcoin is expected to fluctuate in the years to come.

A Brief History of Bitcoin’s Price

The Bitcoin software was made available to the public for the first time in January 2009, which is when the first Bitcoin block was mined as well. During the first few years of its existence, the worth of one Bitcoin was no more than a few dollars. In 2013, the digital coin started getting more and more exposure in the media. Bitcoin’s value increased at $13.40 and kept going up, creating a price bubble. In mid-2015, the price of one bitcoin was around $300. This was when the second growth period started so that in January 2017, Bitcoin could reward investors with a 1,350% return and even reached an all-time high of $20,000. In 2018, things took a turn for the worse with Bitcoin’s price falling down to $4,000 by the end of the year. This year-long bear market greatly affected crypto-related businesses. Luckily, the currency got back on track the following year and even surpassed its all-time high in February 2021.

Macroeconomic Overview

Bitcoin’s price crashed twice, both in 2013 and 2017. Nevertheless, these declines were not a result of any major incident. The digital coin was mostly cut due to some speculations such as worries about hacking risks which hampered the advancement progress of cryptocurrencies in 2018. In 2020, however, Bitcoin and other cryptocurrencies experienced a real financial crisis with the outbreak of COVID-19. Cryptocurrencies were not resistant to the crisis caused by the pandemic, though, as investors began to sell off equities in February. However, regardless of the substantial losses in March 2020, and the disordered Covid-19 response by governments, worldwide markets have managed to make exceptional progress. Research by Dr. Marcin Watorek showed that Bitcoin did not frighten investors; quite the opposite - they didn’t shy away from including it in their investment portfolios. Moreover, his research confirmed that during the Covid-19 pandemic, the cryptocurrency market turned out to be mostly unaffected by the turbulence experienced by all global markets during this period. This observation is in line with and complements the previously published results on the approached stability and maturity of the cryptocurrency market in the past couple of years.

Why 2021 Is the Right Year to Buy Bitcoin

Bitcoin’s Network Is Increasing in Size

Slowly but surely, Bitcoin trading has been increasing in popularity, especially over the past few years. There are more wallets, exchanges, and platforms than ever before. According to the Bitcoin block explorer service data, the number of blockchain wallets used by traders shows an increase from 43 million to over 62 million wallets in the past twelve months. Furthermore, more and more vendors are starting to accept Bitcoin. There are even Bitcoin debit and credit cards that allow users to spend their bitcoins anywhere where Visa cards are accepted. These novelties mean that Bitcoin usage is set to increase in the foreseeable future.

Bitcoin Appears to be Following the Stock-to-Flow Model

An investing concept called “stock-to-flow” can be used to quantify the scarcity of a good. Stock represents the total supply in circulation and flow represents the amount of new supply per year. Supporters of this model have foreseen that the price of Bitcoin should reach somewhere between $100k and $200k at some point in 2021 or 2022. This prediction was a result of a study that covered the demand and scarcity of this asset and compared it to other assets, like gold. Similar to gold, Bitcoin represents a rare asset class but even more importantly, it’s the first rare digital object. When Bitcoin was created, its supply was hard-capped at 21 million BTC but the complex mathematics keeps the supply rate more or less even by increasing the mining difficulty, so that every 10 minutes, a new block containing 6.25 BTC is being mined. While there are critics of the stock-to-flow model, other high profile investors have taken note. In a July 2020 report by Fidelity, the U.S. investment house stated that "Commodities with a [high S2F] have historically served as superior stores of value. Bitcoin’s stock-to-flow will eclipse that of gold following the next halving (2024)."

Bitcoin’s Price Predictions

When it comes to future Bitcoin price growth, the majority of experts, investors, and crypto analysts share a positive outlook with more and more major financial institutions embracing crypto as a payment or investment choice. In that context, Bloomberg analyst Mike McGlone is setting a target of $50k in 2021 and $170k in 2022 for 1 BTC. Moreover, according to the Winklevoss twins, the founders of the US exchange Gemini, Bitcoin might reach $500k by 2030, at which point its market cap would come near that of gold. Finally, as mentioned above, estimations based on the stock-to-flow model show a possibility of Bitcoin rising to $200k in the next couple of years.

Final Words

If you’re wondering when to buy Bitcoin, the answer is now. We can conclude that Bitcoin is a good investment in 2021 and here’s why. Experts agree that the crypto industry is well-positioned to maintain its attractive place in the financial market. Moreover, the history of Bitcoin’s price indicates that Bitcoin is poised to surpass its most recent all-time high again. In addition, the value proposition of Bitcoin is ideally suited to the macro climate since it turned out to be mostly unaffected by the turbulence experienced by all global markets due to Covid-19. Finally, the fact that Bitcoin follows the stock-to-flow model is another sign that it’s a good investment for 2021 because it proves that the asset is scarce and, in turn, more valuable. Let Coin IRA show you how simple it can be to join the growing masses adding Bitcoin to their IRA. With a clear picture of Bitcoin’s forecast, this may be your once in a lifetime opportunity to dramatically impact the quality of your life in retirement.

Why Is Bitcoin Going Up

If you’re a novice Bitcoin supporter who wants to learn more about the crypto market before joining in, you must have noticed the newly-surrounded hype around this digital asset. The increased media attention is a result of the unprecedented price rally as Bitcoin smashed its records this year. In the last 12 months, Bitcoin’s price has increased at an unprecedented rate from lows of $4,000 to over $40,000. High-net-worth individuals and institutional investors are regarding Bitcoin as a hedge asset and consider it their safety net against inflation. Today, we’ll take a look at the factors that cause Bitcoin’s price to go up and down, what has influenced its current growth, and what are the implications for current and future Bitcoin investors.

What Factors Affect Bitcoin’s Price?

Scarcity

One of Bitcoin’s key trump cards that makes it an attractive asset and drives its price forward at the same time is its built-in scarcity. When Satoshi Nakamoto designed the world’s first cryptocurrency, he set an upper limit of 21 million for Bitcoin’s supply. Today, over 18.5 million BTC are already in circulation. However, the increasing mining difficulty ensures that new bitcoins are introduced at a fixed rate. Moreover, the number of BTC that enters a blockchain block together with the miners’ reward get slashed in half every four years in an event known as the halvening. Although we won’t run out of new BTC overnight, scarcity builds up buying pressure and the increased demand drives Bitcoin’s price up. It’s hardly surprising that the hype around every subsequent halvening resulted in a Bitcoin rally, no matter how small-scale or short-lived it was.

Sovereignty

A major difference between fiat and cryptocurrencies is that fiat currencies are backed by the government and central banks and possess no intrinsic value other than the one determined by these central authorities. Bitcoin, on the other hand, is backed by a complex algorithm and proofing mechanism that prevents any third-party meddling. Instead of relying on intermediaries and financial institutions, Bitcoin’s network functions in a decentralized and transparent manner. The network participants or “miners” verify the transactions by solving a cryptographic puzzle and storing them on a digital ledger called the blockchain. In times of financial crisis, Bitcoin is seen as more secure than fiat currencies. It represents a “safe haven” alternative for many investors and, as a result, increases in value against fiat.

Utility

Bitcoin’s price largely depends on its utility, i.e., the number of use cases that Bitcoin enthusiasts can find for their coins. Massive adoption will lead to higher demand but because of Bitcoin’s scarcity, the price of the asset will skyrocket. Gradually, Bitcoin is turning into a global currency as more and more people become interested in contactless and, above all, decentralized money transfers. Free from any ties to financial intermediaries, Bitcoin transactions are faster, cheaper, and more secure. Prompted by the Covid-19 pandemic, more and more merchants and retailers around the world have started supporting Bitcoin payments and research shows that the number of their customers has increased significantly.

Why Is Bitcoin Going Up Now

In the last couple of months, Bitcoin investors have anticipated an even larger-scale Bitcoin rally than the one in 2017 when Bitcoin’s price went from around $5,000 in October to almost $20,000 by the end of December. Unfortunately, the spike proved to be a bubble, and Bitcoin’s price was back to $7,000 by April 2018. However, this time things are different because Bitcoin’s adoption is higher than it was three years ago. PayPal has just made it possible for its users to buy, sell, and hold Bitcoin via their PayPal accounts. The company is also planning to allow users to purchase goods and services from PayPal’s 26 million merchants with Bitcoin in the future. Apart from the growing acceptance of Bitcoin as a means of payment, we’ve seen a rise in its potential as a store of value too. Both high-net-worth individuals and tech companies have taken a liking to this digital asset. For instance, CoinTelegraph informs that the leading business intelligence company, MicroStrategy, has recently announced that it has raised $650 million worth of convertible senior notes to purchase BTC as part of the company’s strategy to convert part of its cash reserves into alternative assets. Similarly, the American payment provider Square has purchased $50 million worth of Bitcoin for company purposes. Finally, Covid-19 has accelerated the digitalization of many industries. People have had no choice but to turn to online transactions during lockdown and many have, in a way, been initiated into the digital world. This is beneficial for Bitcoin because it takes away part of the stigma and suspicion that people might have towards new financial technologies. At this point, you might be asking yourself what these recent events and price surges mean for you as a future Bitcoin investor. Is this upward trend going to continue, or are we in for another bursting bubble? The truth is, no one knows for sure. The cryptocurrency market is largely built around speculations and market predictions (more so than other markets) because of its volatile nature. Conservative experts and Bitcoin nay-sayers are quick to dismiss Bitcoin’s potential by arguing that once Bitcoin’s price reaches its peak, it will tumble down within a few months. But the majority of financial experts and economists believe that this time there’s hope for a more steady growth that will continue throughout 2021. If we look at Bitcoin’s price history, we’ll see that although it’s true that it’s full of ups and downs, Bitcoin has always managed to recover and double if not triple in price. Moreover, its price fluctuations are directly linked to financial events, such as increased restrictions, new market players, economic crisis, large-scale purchases, etc. There is one thing that can’t be disputed, however, and that is that Bitcoin remains the most popular cryptocurrency,

Bottom Line

We hope our guide can help you make a well-informed decision about Bitcoin and potential Bitcoin investing. If we managed to spike your interest, we encourage you to browse through our Coin IRA website and get acquainted with our mission and services. Getting started in Bitcoin is easier than you think. Speak with a Coin IRA Crypto Specialist today about the benefits of crypto ownership. With our help, saving for your future has never been easier!

Why Cryptocurrency Is the Future?

After the launch of Bitcoin, the world’s first cryptocurrency, there were a lot of naysayers criticizing the project and dismissing its potential. However, contrary to their beliefs, Bitcoin and the cryptocurrencies that followed have gathered momentum in recent years. In the eyes of crypto enthusiasts, this was simply a natural transition. Just like people moved from gold to paper money in the past, so too in the digital era in which we live, people have shifted to cryptocurrencies or digital money. In this guide, we’ll talk about what makes crypto assets better than traditional fiat currencies. We’ll mention some of their challenges, and how they can be avoided or solved. Finally, we’ll discuss why cryptocurrency is the future, and what investors should expect.

Why Choose Cryptocurrency?

In order to understand why so many people are investing in cryptocurrencies, let’s take a look at their main features and use cases.

Decentralized Payments

The main incentive for designing the first cryptocurrency, Bitcoin, back in 2009, was to replace the central authority in charge of people’s transactions with a new model based on cryptographic proof. This model is implemented on a peer to peer (2P2) network that uses blockchain technology to store and secure the transactions. As a result, cryptocurrency transactions are faster, cheaper, and more private than bank transfers. The blockchain only incurs a small mining fee with no additional service costs. Even if you’re making an international payment, the procedure is quite straightforward, unlike wire transfers where the processing time of the recipient’s bank typically delays the payment. Moreover, when sending cryptocurrency, both the sender and recipient’s names are hidden. Instead, the blockchain shows their public key, i.e., an encrypted address that functions as a pseudonym. That’s why we say that cryptocurrency transactions aren’t anonymous but pseudonymous.

Scarcity

Scarcity refers to the total supply of a given cryptocurrency or the number of coins in circulation. Unlike the unlimited supply of fiat currencies, the supply of most crypto assets is limited. For instance, Bitcoin’s founder, Satoshi Nakamoto, hard-capped his coin at 21 million BTC. What’s even more interesting, despite the growing demand, is that the cryptocurrency mining process continues at the same rate. When the demand for the crypto assets increases, so too does their mining difficulty. This supply inelasticity is what causes price volatility, a quality that turns cryptos into a risky but profitable investment.

Utility

Cryptocurrencies are gradually turning into global virtual currencies thanks to their multifaceted utility. On the one hand, they’re lucrative investment assets that allow investors to diversify their portfolios. On the other, they’re becoming increasingly used as mediums of exchange. During the COVID-19 pandemic, contactless payments have become both a necessity and the rule, resulting in more and more merchants accepting cryptocurrencies as a payment method. For example, in partnership with the payment processor Salamantex, over 2,500 merchants in Austria support payments made with Bitcoin, Ethereum, or Dash. On top of that, leading payment companies like PayPal, Visa, and Mastercard are standing up for crypto assets as well. Cryptocurrencies are also increasingly used as utility tokens. It all started when the Ethereum platform created the first self-executable smart contracts, where tokens were used to foster a bond between the involved parties. In turn, smart contracts made it possible for developers to build decentralized applications.

What Are the Challenges of Cryptocurrency?

One of the main challenges that cryptocurrencies are facing today is the lack of regulation. Their decentralized nature makes it harder for governments to design suitable regulatory frameworks. On the one hand, this might compromise their decentralized nature but on the other, it can provide better user protection. In countries like Australia, the US, the UK, and Canada, cryptocurrencies are treated as property. As a result, crypto profits are subject to capital gains tax. Another challenge that affects crypto investors is the unstable and volatile nature of the crypto market. You should be very careful when choosing the asset you want to invest in, as you don’t want to be an easy target of experienced investors’ pump and dump schemes. These investors, known as “whales”, create a hype around a new cryptocurrency to lure novices to buy coins and drive their price up. When this happens, the whales sell their shares, but the tricked investors lose their money.

What Does the Future Hold for Cryptocurrency?

We’ve seen how cryptocurrencies are used today, now let’s see what the future has in store for these assets.

Central Bank Digital Coins

The interest in both stablecoins and central bank digital coins (CBDCs) is on the rise across the world. For example, the Bank of China is currently testing its CBDC pilot program in some major Chinese cities. The Bank of England, the Bank of Sweden, and the Bank of France are all showing interest in CBDCs as well. Experts predict that this shows their readiness to recognize the potential of cryptocurrency and blockchain technology. They see it as a step towards solving the problem with financial inclusion in many under-developed and developing countries.

Bitcoin’s All-Time High

At the start of 2020, a lot of experts predicted that Bitcoin’s price would experience a major surge after its halvening. A halvening takes place every four years and marks the date when the Bitcoin mining reward gets cut in half. The last Bitcoin halvening was in May 2020. Since then, Bitcoin’s price has more than doubled! In an interview for Forbes, Bloomberg analyst Mike McGlone predicts that Bitcoin can reach $20,000 or even more by the end of the year, hitting a new price record. This might cause a chain-reaction leading to other cryptocurrencies gaining in value.

Ethereum and the Rise of DeFi

Next to Bitcoin, Ethereum is the second most popular cryptocurrency on the market, both in terms of its value and market capitalization. When talking about utility, we mentioned that Ethereum is used to fuel smart contracts and decentralized applications. Apart from them, developers can use the Ethereum network to build new cryptos too. In order to improve the performance of the network and increase its scalability, Ethereum is planning to launch the Ethereum 2.0 blockchain. Among other improvements, this blockchain will use a different consensus mechanism called Proof of Stake that requires less computing power to mine new coins. The PoS will make the network more scalable, secure, and decentralized. Although we can only speculate on the future of cryptocurrency, we can’t neglect the fact that the majority of these predictions are highly promising. One can never be too careful when dealing with a volatile market, but we’re confident that if you do your research and choose a reliable cryptocurrency, there’s no room for doubt. We encourage you to invest in cryptocurrency and speak to a Coin IRA Crypto Specialist about the benefits of opening a Cryptocurrency IRA account. That way, you’ll be both saving for your future and protecting your assets from inflation and devaluation. It's easier than you might think!
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