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CRYPTOCURRENCIES - BUYER BEWARE!

By Louis P. Stanasolovich, CFP®, CCO, CEO and President of Legend Financial Advisors, Inc.®and EmergingWealth Investment Management, Inc.®


 

Many professional investors, including those at Legend Financial Advisors, Inc.®, are skeptical of the Bitcoin Currency and other similar currencies.  These currencies have received a great deal of press over the last few years and probably will the next few years as well.

 

So far, there has not been any realistic way to invest in Bitcoin or similar currencies.  Many investment sponsors have been seeking approval from the Securities and Exchange Commission (SEC) to offer Exchange-Traded Funds (ETF), Limited Partnerships and Exchange-Traded Notes (ETN) but have been turned down.  However, these cryptocurrencies are only a few years away at most before coming to reality.  Remember!  Buyer Beware!

 

Listed below are some excerpts from a publication we receive from U.S. Global Investors that was published for the week ending May 22, 2020.  It is a sub-section of the publication, which discusses Cryptocurrencies.  The section entitled “Blockchain And Digital Currencies” discusses the pros and cons of cryptocurrencies such as “Bitcoin”.  It is a good read to gain an understanding of the numerous forms (types) of cryptocurrencies, the volatility of cryptocurrencies and the regulatory process not only in the U.S., but other countries as well.  Again, Buyer Beware!

 

Source: This section listed below was excerpted from "You Just Can’t Print More Gold", by Frank Holmes, CEO and Chief Investment Officer, U.S. Global Investors, (Investor Alert, May 22, 2020), www.usfunds.com

 

Blockchain And Digital Currencies

Strengths

 

Of the cryptocurrencies tracked by CoinMarketCap, the best performing week ended May 22 was DeviantCoin, up 9,000%.

 

Weaknesses

 

Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week ending May 22 was Litecoin SV, down 78.14%.

 

Thesis, a blockchain venture studio, has put a pause on deposits into BTC, writes CoinDesk.  BTC is its new platform meant to put BTC on Ethereum so BTC can be used in decentralized finance.  The Thesis team cited a bug that is now helping early users withdraw any BTC that had been deposited.  “An issue in the app that was missed by our security audit was found by two of our contributors, and we decided to pause deposits for now to ensure the safety of funds,” said Thesis CEO Matt Luongo.

 

Despite positive developments on both the macro and technical fronts, bitcoin prices seem to be struggling with buyer exhaustion, writes CoinDesk, having put in a negative performance in the last 24 hours.  Bitcoin’s value fell from $9,760 to $9,100 mid-week, even though major investment banks like JPMorgan and Goldman Sachs called for an increase in the size of the inflation-boosting government bond purchase programs run by the Federal Reserve and other major central banks, the article continues.

 

Opportunities

 

Cryptocurrency platform Luno is in talks about expanding in Kenya and Ghana to extend its African footprint, writes Bloomberg, as bitcoin rallies 99 percent over the past two months amid the coronavirus pandemic. The South African company now employs 400 people across seven offices in Africa, Europe and Asia.  “It’s markets we have a keen interest in, and Ghana and Kenya are high on our list,” Luno General Manager Marius Reitz said.

 

The latest implementation of bitcoin on the Ethereum blockchain quietly went live this week, writes CoinDesk.  According to Etherescan, there are 1.24 renBTC live on the Ethereum mainnet now.  Sources with knowledge of the project have confirmed this is the Ren smart contract, live ahead of its launch announcement.

 

Three new bitcoin metrics are pointing to the sky, despite $10,000 staying out of reach for the BTC/USD this week, reports CoinTelegraph.  Timothy Peterson of Cane Island Alternative Advisors revealed on Twitter the following: “I track 3 #bitcoin metrics: Metcalfe value, lowest price forward and 200-day moving average.”  He continued by explaining that “April 29th was only the fourth time in history they converted.  The prior three were followed by a substantial uptrend in price.”

 

COPYRIGHT 2020 LEGEND FINANCIAL ADVISORS, INC.®


 


 

 

Legend’s Fee-Only And Transactions Disclosure:
 

1 Legend Financial Advisors, Inc.® (Legend) is a Fee-Only Advisory Firm.  Fee-Only Means Legend Never Receives Any Commissions.

Legend’s Clients Will Not Pay (a) a Transaction Fee (also Known as a Trading Fee or Commission) for Exchange-Traded Funds (ETF’s) and/or Exchange-Traded Notes (ETN’s) as well as Exchange-Traded Equities through Virtually All Custodians that Legend Utilizes. However, Open-End Mutual Fund Trading Fees Are Charged by Custodians.

Legend will Trade Open-End Mutual Funds, Usually an Institutional Share Class, if available, on Behalf of the Client, Through a Few Non-Related Institutional Custodians.

An Institutional Share Class of an Open-End Mutual Fund is Usually the Lowest Cost Share Class with Regard to the Expenses it Charges.  Therefore, Legend Utilizes No-Load, Institutional Cost, Share Classes of Open-End Mutual Funds.

Due to its Desire to Reduce its Clients’ Investment Costs.  As a Result, Legend’s Clients Often Pay a Small Transaction Fee for Institutional Mutual Fund Trades to the Custodian (Also Known as a Trading Fee or Commission).

Legend Never Receives any Portion of Such Fees/Commissions.

(a) Please Note Certain Custodians that Legend May Use to Accommodate Certain Clients May Charge a Very Small Transaction Fee.



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