Several coins are on the rise again, even the recent crisis could not change that - on the contrary. In the midst of the banking turmoil, cryptocurrencies convinced as an alternative to traditional currencies.
6 April 2023. FRANKFURT (Börse Frankfurt).
The significant rise in the price of Bitcoin, Ethereum and others is once again attracting many investors to crypto ETNs. "With the bankruptcy of Silicon Valley Bank, there was a real push," notes Jan Duisberg, who trades funds, ETFs and also crypto ETNs for ICF Bank. "After all, cryptocurrencies would not have been affected by a real banking crisis." A few months ago, the market had already been pronounced dead, he said. "Now it's back." How it continues, however, remains to be seen.
"There is a bit more confidence again, even in the small cryptocurrencies," says Torben Bendt of Lang & Schwarz. The risks would still be seen, but accepted. "The banking crisis has also highlighted the risks of traditional investing."
New highs for the year for bitcoin
The Bitcoin costs 25,876 euros at noon on Thursday. Since the beginning of the year, this results in a price increase of 65 percent. Ethereum, the second most important cryptocurrency, currently costs 1,723 euros, a plus of 53 percent this year.
This makes up for at least part of the heavy losses from 2022, which was marked by bankruptcies and scandals. As a reminder, in November 2021, bitcoin had climbed to an all-time high of nearly $69,000. Then it went down to below 16,000 US dollars in November 2022.
"Bitcoiners feel vindicated"
The crisis resistance of cryptocurrencies has certainly caused astonishment in the market. As Cyrus de la Rubia of Hamburg Commercial Bank notes, cryptocurrencies have previously declined whenever equities also declined. "Since crypto stocks are considered highly risky, especially by institutional investors, this asset class regularly took a hit when stocks took a beating." With the banking crisis this March, that pattern was broken for the first time, he said: Stocks lost, cryptocurrencies gained. "Bitcoiners, whose view is that the central bank money-based banking system is doomed to fail, feel vindicated."
However, it's not all good news: As revealed last week, the U.S. futures market regulator CFTC is suing the world's largest crypto exchange Binance. The CFTC accuses Binance Holdings and CEO Changpeng Zhao of various violations of the Commodity Exchange Act and CFTC rules. Among other things, Binance had not properly registered with the CFTC. Binance was considered the last major platform after the collapse of crypto exchange FTX.
Ripple, Cardano and Chainlink also back in notice
There is a lot more going on again in the trading of crypto ETNs. Most of it revolves around Bitcoin and Ethereum. By the way, on April 12, the decentralized Ethereum network will undergo another major upgrade. It is supposed to bring many improvements. The impact on the price is debatable.
Duisberg reports good turnover for the VanEck Bitcoin (DE000A28M8D0) as well as Ethereum trackers from VanEck (DE000A3GPSP7) and 21Shares (CH0454664027). The 21Shares Crypto Basket (CH0445689208) and 21Shares Ripple XRP (CH0454664043) would also be in consistent demand. "However, the revenue levels of 2021 are far from being reached," he said.
"Flows have been concentrated in bitcoin products," Adrian Fritz of issuer 21Shares also reported. Torben Bendt of Lang & Schwarz reports clearly increased turnover and especially purchases. "Especially in small cryptocurrencies, there was virtually no turnover for a long time, that is definitely different now." He, too, cites 21Shares Ripple XRP, but alongside it also 21Shares Cardano (CH1102728750) and 21Shares Chainlink (CH1100083471). However, bitcoin and ethereum trackers, such as ETC Group Physical Bitcoin (DE000A27Z304) and WisdomTree Ethereum (GB00BJYDH394), also saw the highest turnover at Lang & Schwarz.
Profits from the purchase and sale of cryptocurrencies are subject to income tax, as the Federal Fiscal Court ruled at the end of February. A plaintiff had reported 3.4 million euros in profits from private crypto transactions to the tax office, but did not want to pay taxes on them. His argument: cryptocurrencies were nothing tangible, but pure computer algorithms and not an economic good whose trade could be subject to tax. However, the judge ruled that virtual currencies are indeed economic goods that have a market value and are bought and sold as a means of payment on trading platforms. The profits are thus subject to the Income Tax Act as "private sales transactions". As usual, however, this only applies within a speculation period of one year; if the holding period exceeds one year, the gains from private sales transactions are tax-free.
by: Anna-Maria Borse, 6 April 2023, © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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