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Crypto SWOT: crypto wealth mints next generation of luxury super-spenders

Commentaries & Views

Strengths

  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Anti-Lockdown (FREE), rising 41,501.58%.

  • Bitcoin has retreated 30% from an all-time high, but the cryptocurrency is still about 60% so far in 2021. This return exceeds traditional assets like global stocks, commodities, and gold, writes Bloomberg economists.

  • Crypto wealth is minting the next generation of super spenders, according to a recent Bloomberg article. It is not all due to the post-pandemic pent-up demand though, suggests Jefferies International Ltd. No, instead, there seems to be significant impact from cryptocurrency wealth that is situated to benefit luxury good producers. Some of the luxury brands posed to benefit the most include Louis Vuitton and Gucci, writes Jefferies analyst Flavio Cereda.

Weaknesses

  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was Crimecash (CGOLD), down 99.27%.

  • According to a Bloomberg article, Binance has dropped its Singapore cryptocurrency application to run a bourse in the city-state, ending an effort that started last year to win approval from Singapore's authorities. The fiat-to-cryptocurrency trading platform, Binance.sg, will close by February 13, 2022. The company was among 170 other firms that applied to the Monetary Authority of Singapore for a permit to provide cryptocurrency services.

  • CEO Richard Bernstein of Richard Bernstein Advisors told CNBC this week that "cryptos are the biggest financial bubble ever in history." In an article published by Forbes, Bernstein also said "This is a monster one [bubble]." Bernstein places his faith, instead, in the energy sector, believing it to be a much safer, smarter bet than cryptocurrency and innovation disruption.

Opportunities

  • Crypto-themed hedge funds outperformed Bitcoin's year-end slump, says Bloomberg. Hedge funds offering a more diverse portfolio of cryptocurrencies got a leg up on Bitcoin this last month.

  • WAGI United says it's in the advanced stages of purchasing an English Football League club. The investors are believed to be the first group to buy a major sports franchise with cryptocurrency serving as a significant funding source, according to a Bloomberg article.

  • Reddit co-founder creates $200 million fund with Polygon for Web 3, writes Bloomberg and CoinDesk. Alexis Ohanian's venture capital firm Seven Seven Six and the Polygon Network have created this initiative to invest in social media and Web 3-based projects. "The initiative will back projects that explore better ways for humans to connect online," announced Polygon last Friday.

Threats

  • Bitcoin's slide from a record high extended into a fifth week on Monday. The largest cryptocurrency fell below $48,000 and on the breach of its closely watch 200-day moving average, writes Bloomberg. "The idea that as it matured, the volatility would ease has not really materialized," said Marc Chandler, chief market strategist at Bannockburn Global Forex.

  • According to an article published by CNBC, the IRS has its eyes on crypto investors. Investors must report taxable 2021 transactions involving Bitcoin, Ethereum, Dogecoin and other cryptocurrencies to the U.S. federal government.

  • Shares of Coinbase Global Inc. fell on Wednesday after prices of cryptocurrencies went haywire, wrote Bloomberg. It is unknown whether the cryptocurrency trading platform will recover if and when Bitcoin and other crypto coins bounce back into a more bullish rally versus its current slump.
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