2021 Crypto News Every Investor Needs to Know

2021 Crypto News Every Investor Needs to Know
What started as a token that a community-controlled and represented a meme, has grown to become a multi-billion dollar crypto project. The number of cryptocurrency markets is on the rise, and more and more individual investors are entering the world for crypto trading. When it comes to cryptocurrency, one of the biggest challenges for investors is that they do not get caught up in all the hype. To make the best investment decisions, you must understand the important trends in crypto assets and cryptocurrencies such as bitcoin. By better understanding the different types of cryptocurrencies and blockchain technology, you will be more equipped to decide whether a potential investment opportunity is worth it. Based on a recent report from blockchain data firm Chainalysis, in 2021, scammers took $14 billion worth of cryptocurrencies. This increased what this particular blockchain data firm reported in 2020 about how scammers managed to take up from $7.8 billion. Thus, crypto news is important news in the investing world. Crypto has been a disruptive innovation in digital currency that has opened up many avenues for investing. Today, we’ll review some of the key crypto news thus far in 2021.

Mandatory Yearly Tax Reporting

This year many casual crypto investors and small business owners started to learn new financial terms. This might become a series of challenges for investors. SEC issues a regular investor alert to the investors about risks arising from short-term trading based on social media. One of the investor alerts is: the $1.2 trillion deal requires that brokers report annually to tax authorities on the sales of digital currencies, beginning in January 2023. While some casual investors may be unfamiliar with all of these terms and what they each mean, IRS is not unfamiliar with them. That is the main reason why the U.S. tax agency is focusing more resources and effort on securing crypto taxes. Some cryptocurrency investors may find themselves facing higher taxes, as the infrastructure bill aims to curb future reporting, say financial experts. The $1.2 trillion deal includes a yearly reporting requirement for digital currency brokers. It starts in January 2023, and it will pay for President Joe Biden’s domestic spending agenda. House lawmakers also want to narrow the scope of the regulation to brokers. But for those crypto investors who haven’t been tracking the digital currencies, are still expecting a costly surprise. The IRS treats virtual currencies, like bitcoin ether and NFTs, differently from some other assets and investments. There are certain rules that you must follow if you sold or traded any of those assets last year. Even if you are a casual investor, you must realize that cryptocurrency is not like any other type of currency out there. In recent years, there have been a lot of cryptocurrency firms sprouting, all with the same confusing regulatory background. Hence, institutional investors need to understand what pitfalls they should avoid when choosing partners to trust with their digital assets.

US-Based Financial Advisors Recommend Crypto Over EFTs

Breaking crypto news includes the fact that United States financial advisors are making a serious shift in their investment recommendations to clients. Instead of typical products such as exchange-traded funds, the crypto market is taking the stage. Cryptocurrencies and digital assets have become a rising interest in the advisor customer base. As of this year, “more than 26% of advisors indicated that they plan to increase their use and recommendation of cryptocurrencies over the next 12 months.” That number is surely increasing. Until recently, advisors were cautious of digital assets. Previously, most investors considered them to be a “fad and avoided at all costs”. Now, there’s an immensely high demand for cryptocurrencies and nearly 50% of US-based investors want in. In contrast with cryptocurrencies, legacy finance investment products saw a lower rate of recommendations this year. Approximately 64% of financial advisors said they suggest investing in ETFs to their clients this year, down from 85% in 2020, and individual stocks are down from 75% to 57%.

Cathie Woods Boosting Bitcoin

The Founder and CEO of Ark Investment Management Cathie Woods stated in a blog the other day that deflation is on the rise and should be high on the economic recovery concerns- as opposed to inflation. “Understandably, given the massive monetary and fiscal stimulus in the global economy, most economists and strategists are weighing the odds of inflation. We are focused on the risks of deflation, some but not all of which would be bad news,” Wood writes. The bad deflation would come from “short-term oriented, risk-averse shareholders,” that force companies to concentrate too much on buybacks, dividends, and boosting earnings at the expense of innovation. Good deflation, Wood believes, will increase when companies sacrifice their short-term profiting for innovation areas cost-cutting. Wood sees two reasons for the recent change to value from growth, which has inevitably strengthened the bull market:
  1. Cyclical earnings growth “temporarily” outpacing early-stage companies.
  2. Higher inflation and rate expectations, “which has shortened durations and increased the discount rates used to value long-term cash flows.”
“If we are correct in our assessment that the risk to the outlook is deflation, not inflation, then nominal GDP growth is likely to be much lower than expected, suggesting that scarce double-digit growth opportunities will be rewarded accordingly,” Wood concludes. “Growth stocks in general and innovation-driven stocks, in particular, should be the prime beneficiaries.”

Bitcoin and Outages on the Rise

Investors must understand that Bitcoin is a highly speculative investment. Additionally, anyone trying to become an investor in the Bitcoin futures market should be aware that this is a highly speculative investment. To properly understand the bitcoin and bitcoin futures markets, investors should also consider that the Bitcoin futures market is extremely volatile and that there is no regulation, and that there is potential for fraud and manipulation in the Bitcoin futures market. Despite constant controversies on the value and promise of investing in Bitcoin, stock prices are on the rise. U.S. miners are raising hundreds of millions of dollars to invest in bitcoin mining. They are also renovating abandoned factories and power plants so that they can become large bitcoin mining facilities. The entire Bitcoin network may have invested millions of dollars in hardware and infrastructure. As a result, it will be difficult to transition to a more energy-efficient system, especially since there is no central oversight body. In this past year, primary indexes show a real-time value increase (in US dollars) by nearly 660%. As of Thursday, Bitcoin crossed the $40,000 mark. Bitcoin is the largest cryptocurrency by market cap. It is also a good indicator of what the cryptocurrency market is like in general, because other currencies like Ethereum and altcoins tend to follow its trends. Most crypto exchanges in the United States reported connectivity issues due to the high demand for Bitcoin. Therefore, operational and connection problems continue to skyrocket. The “heavy loads” are causing major crypto exchanges, such as Binance and Kraken, to experience frequent outages. Binance CEO Changpeng Zhao has chalked downtime problems at his exchange to “scaling issues.” Coinbase CEO Brian Armstrong states that they plan to make important changes. They plan to invest in additional servers and customer support to ensure that they could handle increased traffic loads in the future. The latest crypto news should be good news for investors, offering some peace of mind. The markets will not take kindly to operational problems as Bitcoin price rises due to consumer and institutional demand.