Markets steady amid geopolitical turmoil
Financial markets seem largely unfazed by the geopolitical turmoil. American stock markets are setting new records and Bitcoin is trading close to its all-time high, at least when measured in dollars. The momentum is being fueled by a shift in policies: governments are once again opting for growth, and investors are looking for protection as well as returns. Read more about it in this edition of Bitvavo Market News.
Market update
Last week, the leading U.S. stock indexes S&P 500 and Nasdaq 100 rose to an all-time high. Investors appear to be looking beyond short-term turmoil. War in the Middle East? A tariff battle between China and the U.S.? Markets seem to be betting that things will work out.
There are growing signs that governments and central banks worldwide are on the brink of steep budget deficits. In Europe, the focus is on investing in defense and energy. In the U.S., the government has pivoted from cutting costs to increasing economic growth.
This shift is generally a tailwind for risk assets, particularly for Bitcoin, which is viewed as digital gold as well as an emerging technology. Bitcoin, currently at $107,500, is just below its all-time high of $112,000.
When measured in euros however, the gap is much greater. On Monday morning, the price was ā¬92,000, 13% lower than the record of ā¬106,300 in January this year. That's because the dollar has depreciated considerably against the euro in recent months. As a result, it may take a stronger price rally in Europe to reignite investor enthusiasm for Bitcoin.
The new 60/40 portfolio
Ric Edelman is considered a heavyweight in the United States. For decades, he has been one of the best-known financial advisors in the country. He has written several best-selling books, hosted his own radio show for years, and built Edelman Financial Engines into one of America's largest independent wealth managers. He's not a hype-driven influencer, but rather someone who presents himself as a down-to-earth guide to the investment world.
Which is precisely whyĀ his statement last week stood out: according to Edelman, investors should now allocate between 10% and 40% of their portfolio to crypto. That's a huge jump from his previous recommendation of just 1%.
According to Edelman, many of the uncertainties that once surrounded crypto have now disappeared. The market has matured, regulations are clearer, and there are now regulated investment products such as ETFs. The role of large institutional players, from BlackRock to Fidelity, also contributes to this new confidence. In short, Edelman no longer sees crypto as a speculative fringe asset, but as a strategic component of a long-term portfolio.
Edelman draws a comparison to the classic 60/40 portfolio (sixty percent stocks, forty percent bonds) which he believes has lost its shine. In his view, that model is "dead", due to a toxic cocktail of low interest rates and high correlations between stock and bond prices. In his view, crypto increasingly fulfills the role of asymmetric source of growth.
The timing of his stance is telling. Just when digital assets are widely accessible through regulated channels for the first time, one of the most influential voices in asset management is opening the door... not for a small "trial percentage," but for serious allocation.
Speaking of regulated channels: BitvavoĀ received its MiCA license last week. This is an important milestone as it allows the company to offer its full range of services across Europe. And with Edelman's shift in perspective in mind, this makes for a promising outlook.
In other news
Ledger stops supporting popular Nano S-wallet. The nearly decade-old hardware walletĀ will no longer receive updates or security patches. While the device will continue to function for now, Ledger advises users to switch to a newer model. Anyone transferring their recovery phrase should do so with care as itās a particularly sensitive step. Some users feel pressured to buy a new device, which has understandably led to frustration.
Crypto ownership may soon count towards U.S. mortgages.Ā The US government wants digital assets to be factored into the assessment of a person's assets when applying for a home loan. The proposal specifically concerns digital holdings kept on regulated U.S. exchanges. It's a big step: Bitcoin and other coinsĀ are being taken more seriously as part of an individualās net worth. That said, risk adjustments and volatility factors will still apply.
Ripple and the SEC finally end their long-running legal battle. The two parties tried to formalize their newfound peace through the courts, but the judge refused to overturn a previous ruling that found Ripple had illegally sold XRP to institutional investors. The $125 million fine also stands. With that, both sides haveĀ withdrawn their appeals to settle the matter, bringing to a close a case that has long served as a litmus test for crypto regulation.
Ethiopia has earned $55 million from Bitcoin mining in just 10 months. The country used surplus hydropower (electricity that would otherwise go to waste) to power mining operations. This now generates 18% of annual revenue for the national energy company. The proceeds are being invested in expanding the electricity grid, making Bitcoin not only a tool to help prevent waste, butĀ also a driver for infrastructure development and improved living standards.
šŗšøSatoshi Radio: InĀ the latest episode of Satoshi Radio, the hosts take you through a volatile trading week. Bitcoin dropped below $100,000, then bounced back nicely. In the market update, youāll hear what this means. The hosts also discuss the latest news, including a big dent in Bitcoinās hashrate, Texasā new Bitcoin reserve, and crypto as collateral for US mortgages.
This article is for informational purposes only and does not constitute a marketing communication or recommendation. None of the content herein should be considered as investment advice or a substitute for it. Bitvavo makes no guarantees regarding the accuracy or completeness of the provided information. Investments involve risks. There is a possibility of losing your entire invested capital.