IIn this article, Frank Holmes, CEO of US Global Investors and Executive Chairman of HIVE Blockchain Technologies, explores digital currencies, Tesla’s crypto positioning, and the state of gold investment.
The adoption of digital currencies as a form of payment has expanded significantly in the past week, heralding an increasingly important role for cryptocurrencies like bitcoin and ether in our lives in the future.
Both visas [V] and PayPal [PYPL] announced that they will begin to allow the use of cryptocurrencies for settlement of transactions. This happened a week after Tesla [TSLA] the announcement that it will now accept bitcoins as a payment method, and one month after Mastercard [MA] announced that he will start supporting cryptocurrency sometime this year.
PayPal Checkout with Crypto, available to select US users last Wednesday (March 31), gives consumers the ability to purchase goods and services from 29 million merchants using Bitcoin, Bitcoin Cash, Ether or Litecoin.
What’s more, there is no additional transaction fee.
PayPal, founded in 1998 by Peter Thiel and Elon Musk, among others, has become well known. 2020 was a record year for the online payment service as people got stuck at home and companies digitized their transactions. Total payments totaled $ 277 billion, up 39% over the previous year, while the platform added 16 million new accounts for a total of 377 million registered accounts.
Very soon, each of these users will be able to use popular digital currencies to buy almost everything from a cup of coffee to a new car. This is a huge step forward for a still evolving technology.
Visa, meanwhile, announced that it was the first payment processing company to transact using USD Coin (USDC), an open source stablecoin backed by the US dollar. According to the coin’s website, USDC is “issued by regulated financial institutions, backed by fully reserved assets” and “redeemable at a 1: 1 ratio per US dollar.” As of March 28, USD 11.3 billion was in circulation.
Visa users will not only be able to shop with USDC, but Visa said it will one day also support new central bank digital currencies (CBDCs) as they become available. According to the company, about 80% of central banks are seriously considering or are in the process of launching their own national digital currency.
Mastercard is reportedly doing the same, announcing in February that it is interacting with “several major central banks around the world” in the development of the CBDC. At the moment, there is no information on when Mastercard customers can expect to start paying with cryptocurrency, or even what cryptocurrencies will be supported, but it looks like we will soon hear something when Visa took the first step.
Tesla now accepts bitcoins
Those of you buying Tesla may have noticed that you can already choose Bitcoin at checkout, just a week after Elon Musk. tweeted the news.
It is currently the sixth largest US company by market capitalization, overtaking Visa and Berkshire Hathaway. [BRK.A]Tesla is ramping up Bitcoin hoarding.
If you remember, the company announced that it bought $ 1.5 billion worth of digital currency as part of a corporate policy that allows the electric vehicle manufacturer to invest in alternative reserve assets, including not only cryptocurrencies, but also gold bars and gold ETFs.
Musk writes frequently about cryptocurrencies to his nearly 50 million Twitter followers, which can cause incredible price fluctuations. Dogecoin is up over 1000%, from $ 0.007 to $ 0.080, in just 12 days in January and February after Tesla “Technoking” tweeted about it.
Someone recently developed a bot that automatically buys bitcoins whenever Musk mentions it in his tweet. This reminds me of Trump & Dump Bot, which used artificial intelligence (AI) to identify publicly traded companies when they appeared in one of the former president’s tweets. The bot then closed the promotions and donated the proceeds to charity. Trump’s Twitter account was permanently blocked on January 8.
The plunge in gold is the worst start in nearly 40 years. Buy a dip?
Bitcoin price has more than doubled this year and broke the $ 60,000 resistance level in intraday trading on Friday. Air, meanwhile, is up more than 180% in a year after hitting a new all-time high last week.
However, not all inflation defenses have won. Gold has had its worst start to the year since 1982, losing about 12% over a three-month period, even as concerns about inflation intensified.
Since hitting its all-time high of around $ 2070 an ounce in early August last year, gold has been under pressure from steadily rising bond yields. The yield on 10-year Treasuries is currently above 1.7% as investors dump bonds in favor of risky assets. Bond yields rise as prices fall. The US dollar index climbed above 93 last week, which also made the yellow metal less attractive.
I think it is important to note that the investment appeal of gold remains as strong as ever, and it would be wise for investors to consider using this price drop as a buying opportunity. Money printing remains at a record high and debts continue to pile up.
Last Wednesday, US President Joe Biden outlined his $ 2 trillion package to rebuild US infrastructure, a plan that will reportedly be paid over time by raising taxes for corporations and wealthy Americans. This law, if passed, will follow the $ 1.9 trillion coronavirus relief package signed last month.
No inflation? Home prices have risen the most in just 15 years
More economic data was released last week showing inflation is much higher than reported by the Bureau of Labor Statistics. US home prices rose 11.2% year on year in January, the fastest pace since February 2006. The average price for a new single-family home in the United States rose to $ 336,000 in 2020, up from $ 321,500 a year earlier. according to the Census Bureau.
We are talking about the rise in prices for raw materials, especially for lumber, due to which the construction of new houses has stalled. Rising lumber prices have increased the value of a new home by more than $ 24,000, according to the National Association of Homebuilders.
As a result, just over one million new and existing homes were listed for sale in the United States in February, according to the National Association of Realtors, the lowest on record for 1982.
Historically, home ownership has been one of the key ways Americans accumulate wealth. But as prices rise, buying a home may not be affordable for many families.
The good news is that Americans seem to be getting back to work. The US economy added 916,000 jobs in March, the most since August. The industry with the largest share of new jobs is the leisure and hospitality industry, which at first glance may not seem very positive, as these jobs tend to be low-paid. However, I see this as another positive sign that the economy is opening up again and Americans are returning to life before the pandemic.
This article was originally published by on Frank Talk, a blog by Frank Holmes, CEO of US Global Investors and Executive Chairman of HIVE Blockchain Technologies.
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