FRANKFURT (DEUTSCHE-BOERSE AG) – A number of coins are on the rise again, and the most recent crisis could not change that – on the contrary. In the midst of the banking turmoil, cryptocurrencies made a strong impression as an alternative to traditional currencies.
April 6, 2023. FRANKFURT (Frankfurt Stock Exchange). The significant rise in the price of Bitcoin, Ethereum and others is once again attracting many investors to crypto ETNs. “There was a real boost with the bankruptcy of the Silicon Valley Bank,” notes Jan Duisberg, who trades funds, ETFs and also crypto-ETNs for the ICF Bank. “Cryptocurrencies would not be affected by a real banking crisis either.” A few months ago, the market was said to be dead. “Now he’s back.” How to proceed remains open.
“There is a little more trust again, also in the small cryptocurrencies,” says Torben Bendt from Lang & Schwarz. The risks are still seen, but accepted. “The banking crisis has also made the risks of traditional investments clear.”
New yearly highs for Bitcoin
Bitcoin costs 25,876 euros on Thursday afternoon. Since the beginning of the year, this results in a price increase of 65 percent. Ethereum, the second most important cryptocurrency, is currently trading at $1,723, up 53 percent this year.
At least part of the heavy losses from the year 2022, which was characterized by bankruptcies and scandals, has been made up for. As a reminder, in November 2021, Bitcoin had climbed to an all-time high of almost $69,000. It then went lower to below $16,000 in November 2022.
“Bitcoiners feel validated”
The crisis resistance of cryptocurrencies has caused astonishment on the market. As Hamburg Commercial Bank’s Cyrus de la Rubia notes, cryptocurrencies have previously always fallen when stocks fell as well. “Since crypto assets are considered highly risky, especially by institutional investors, this asset class has regularly been trampled under the wheels when stocks rattled.” With the banking crisis in March, this pattern was broken for the first time: stocks lost, cryptocurrencies increased. “Bitcoiners, who believe the central bank money-based banking system is doomed, feel vindicated.”
However, there is not only good news: As was announced last week, the US 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 failed to register properly with the CFTC. After the collapse of the FTX crypto exchange, Binance was the last major platform.
Ripple, Cardano and Chainlink were also taken into account again
Trading in crypto ETNs is a lot busier again. Most of it revolves around Bitcoin and Ethereum. Incidentally, on April 12, the decentralized Ethereum network will undergo another major upgrade. It should bring many improvements. The impact on the course is disputed.
Duisberg reports good sales for the VanEck Bitcoin (DE000A28M8D0) and Ethereum tracker from VanEck (DE000A3GPSP7) and 21Shares (CH0454664027). The 21Shares Crypto Basket (CH0445689208) and the 21Shares Ripple XRP (CH0454664043) are also in demand again and again. “But the sales levels of 2021 are far from being reached.”
“The flows were concentrated on Bitcoin products,” reports Adrian Fritz from the issuer 21Shares. Torben Bendt from Lang & Schwarz reports clearly increased sales and, above all, purchases Definitely different now.” He also names the 21Shares Ripple XRP, but also the 21Shares Cardano (CH1102728750) and the 21Shares Chainlink (CH1100083471). However, the highest sales were also recorded at Lang & Schwarz Bitcoin and Ethereum trackers, such as the ETC Group Physical Bitcoin (DE000A27Z304) and the WisdomTree Ethereum (GB00BJYDH394).
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Tax liability for crypto profits
Profits from the purchase and sale of cryptocurrencies are subject to income tax, as the Federal Fiscal Court decided 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 are nothing real, but pure computer algorithms and not an economic good whose trade can be subject to tax. However, the judge ruled that virtual currencies are certainly economic goods that have a market value and are bought and sold as a means of payment on trading platforms. The profits would thus be subject to the Income Tax Act as “private sales transactions”. This applies – as usual – but only within a speculative period of one year, with a holding period of more than one year, the profits from private sales transactions are tax-free.
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by: Anna-Maria Borse, April 6, 2023, © Deutsche Börse AG
(Deutsche Börse AG is solely responsible for the content of the column. The articles are not an invitation to buy or sell securities or other assets.)