The Aftermath of BTC’s All-Time High, IRS Confuses Crypto Users While Germany Allows All-Electronic Securities
In this edition:
- Bitcoin Making History — Where Do We Go From $23,000?
- A Piece of Advice for Crypto Newcomers by Coinbase CEO (and Anchor)
- An Ambiguous Tax Form Coming From the IRS
- Germany Legalizes Digitized Securities on Blockchain
It’s beginning to look a lot like Christmas, my fellow Anchorians! And it’s not just the decoration. Every BTC hodler received an early Christmas present (I guess we weren’t particularly naughty this year) since the price reached an all-time high and went over $22k. What a time to be alive, huh.
While the global crypto community remains excited, the mainstream media is also reporting on the phenomenon — and this could result in increased demand, but we’ll get there in a minute.
This event was surely the most striking one, yet we have other important stories to share as well. Some great news is coming from Germany, and not so great from the US. No matter where you are and what your local reality is, cryptocurrencies are universal, so learning about developments all over the world can’t hurt, right?
Anyhow, this is a special 71st edition of Anchor’s Weekly Crypto Roundup, so if you are eager to learn something new — then, please, let’s dive right in!
Bitcoin Making History — Where Do We Go From $23,000?
It finally happened! After weeks of anticipation and BTC’s price flirting with the $20k line, the world’s first cryptocurrency reached an all-time high — at the moment of writing, Bitcoin’s price equals exactly $23,099 (CMC). Not only that the price has surpassed the previous all-time high, but it has also managed to do it for more than $3,000. Will this ultimate bullish trend continue?
While we are lucky enough to joke around saying ‘’well, now EVERYBODY holding BTC is in profit’’, some traders remain careful knowing that the tide can always turn, as it always has so far.
In March (remember that black swan event crash? yikes) we were all on the verge of a heart attack with BTC price lowering to almost $3,500. Now we celebrate! Actually, putting aside this unique tragic event, 2020 was very much okay to BTC. During the last couple of months, Bitcoin was showing every intention to challenge the all-time high from 2017, and it finally did it!
So, what’s next, $30,000? Or going back below $20,000? I guess we’re all dependent on this current market’s enthusiasm resulting in increased demand which is, logically, dictating this surge. One thing is certain, this price jump wasn’t just a short glitch — it’s a trend! For how long, we’ll see.
The critical moment will be when the FOMO disappears, the buying trend slows down, and the selling starts. Naturally, if a major whale transaction happens, it will most definitely influence the price. Difficulties with mining surely ‘help’, leaving the supply crunch.
⬆️ demand + ⬇️ supply = 🚀🚀🚀
In any case, brace yourself, my crypto enthusiast, for the most interesting moments in BTC history are coming! Be careful, have a hedging strategy in place, and enjoy this loco ride.
A Piece of Advice for Crypto Newcomers by Coinbase CEO (and Anchor)
The fact Bitcoin has reached an all-time high inevitably means there will be a lot of ‘newbies’ to crypto trading. While some of them could be very familiar with the industry theoretically, others aren’t in general. Nonetheless, you may know everything in theory, but actually doing it requires patience, knowledge, and at least second-hand experience.
Coinbase’s CEO, Brian Armstrong, wrote a blog post to explain the crypto landscape to newcomers. We acknowledge the necessity to be transparent and cautious, as well as to help new fellow crypto enthusiasts. By the way, both Coinbase and Binance faced outages due to this historical event.
Point one: ‘’While it’s great to see market rallies and see news organizations turn attention to this emerging asset class in a new way, we cannot emphasize enough how important it is to understand that investing in crypto is not without risk. For one, crypto can be a volatile asset class — often more so than the types of traditional financial instruments that most investors are used to.’’
Volatility is BTC’s second name so a good piece of advice would be not to keep all eggs in one basket; diversify your portfolio. This is one of the most common hedging strategies, and it works — in this manner, you simply can’t lose all of your assets.
Point two: ‘’For those who believe in the potential of crypto, we also all have to believe that we’re still in the very early stages and that there’s a lot more to come.’’
Welcome to the rising industry! These aren’t exactly the earliest days (11 years have passed, ladies and gents, feeling old yet?), but it is still an early phase, in a way. The world of crypto grows every day and offers many opportunities. Embrace them; do your research, learn about some interesting projects, how you can utilize crypto and blockchain on a personal, and even a business level.
So, at the same time, be careful and brave, and if you ever need help — Anchor’s Roundup will be there for you.
An Ambiguous Tax Form Coming From the IRS
People from the US are very familiar with Form 1040. For others, it’s a federal tax form used for reporting personal income. And this year’s edition of the form contains a slightly ambiguous question concerning cryptocurrencies.
“At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
Taxes are taxes, nobody’s thrilled about them, but we all do our part, that’s not the issue here. Crypto users from the US, however, are anxious since the wrong answer means, well, perjury.
Clinton Donnelly, a crypto tax expert, commented on Twitter: ‘’If you answer the virtual currency question falsely, you could be charged with perjury. Lawyers call this a “perjury trap.” Most feel the IRS has not provided adequate guidance for taxpayers to know how to report their crypto income, especially in light of DeFi innovations.’’
Furthermore, worded in this manner, the question fails to address situations in which transactions in crypto were made, but there was no profit or actual income. Another question is — what exactly is a virtual currency?
“For example, if your dependent owns cryptocurrency or you have an investment in a pass through entity that deals with cryptocurrency, we don’t know if these two situations fall under the ‘financial interest’ category or not,” said Shehan Chandrasekera, Head of Tax Strategy at CoinTracker.io.
No wonder our American crypto friends are confused and concerned about the taxes for 2020. Still, crypto is big in the US, with many users and crypto-related companies, and they’re all in the same boat.
Germany Legalizes Digitized Securities on Blockchain
Good news is coming from Germany — Chancellor Merkel’s cabinet passed a new law enabling all-electronic securities to be recorded using blockchain.
‘Wertpapieren’ (paper of worth) or securities in English, don’t really have to be paper anymore. More precisely, you don’t need to have a paper certificate for the sale of a security any longer. Olaf Scholtz, Minister of Finance said: “The paper certificate may be dear to some for nostalgic reasons, but the future belongs to its electronic version.”
These actions came as a result of a wider national blockchain strategy. Another cabinet member, Minister of Justice Christine Lambrecht, commented on how this law would provide legal clarity and enhance the potential of the new technologies.
It’s always good to see the legislature keeping up with the new trends in technology, allowing their further development. Many countries, including Germany, recognize blockchain as the future of both public and private sectors.
Eliminating the legal ambiguity means having clear and precise standards, which is very fertile soil for every upcoming blockchain project.
Alas, the end, my fellow Anchorians! This is such a great moment for the global crypto community since we are celebrating another historic milestone. It feels good seeing BTC price having five ciphers and starting with 2 instead of 1. Fingers crossed that we witness even further growth!
Of course, the industry of crypto is much bigger than Bitcoin nowadays, and there are and will be many other important events. Rest assured, our Weekly Crypto Roundup will cover it all.
The world keeps spinning and the news keeps coming, and one other thing is always certain — that I wish you fair winds and the following seas!
Disclaimer: The information provided in this post is not legal, accounting, or financial advice. I am not a lawyer, accountant, or financial advisor. I am not registered as an investment adviser with any federal or state regulatory agency. The Information should not be construed as investment or trading advice and is not meant to be a solicitation or recommendation to buy, sell, or hold any cryptocurrencies.