The creator of Ethereum, Vitalik Buterin, has been named to the TIME 100 list of the most influential people of 2021 (NextAdvisor is a partner to TIME). His nomination to the list highlights the growing cultural relevance of digital currency in 2021. In addition, popular cryptocurrency exchange platform Coinbase says the SEC is pursuing legal action over its in-the-works lending program, Coinbase Lend.
Meanwhile, El Salvador has become the first country to legalize Bitcoin as a currency. The country also purchased 400 Bitcoin — worth $20.9 million — the country’s president revealed last week.
Bitcoin has gone over $50,000 multiple times in recent weeks, following a steady increase since dropping under $30,000 in July.
Here’s a rundown of the latest big crypto news:
- Vitalik Buterin, the creator of popular cryptocurrency Ethereum, was named to the TIME 100 list of the most influential people of 2021 this week. Alexis Ohanian, former executive chairman of Reddit, wrote of Buterin: “What makes Vitalik so special, though, is that he is a builder’s builder. No one person could’ve possibly come up with all of the uses for Ethereum, but it did take one person’s idea to get it started. From there, a new world has opened up, and given rise to new ways of leveraging blockchain technology.”
- Coinbase says the U.S. Securities and Exchange commission is threatening legal action against a new Coinbase product that allows users to earn interest on select assets in Coinbase, called Coinbase Lend. Coinbase said in a blog post las week that it has been engaging with the SEC for about six months on the project, and the legal action comes as a surprise with no explanation. The SEC did not immediately respond for a request for comment. Other crypto lending platforms, like competitor Gemini, currently offer similar programs to what is proposed in Coinbase Lend, as pointed out in the Coinbase statement.
- El Salvador’s president, Nayib Bukele, revealed that the country has purchased 400 Bitcoins worth about $20.9 million in a series of tweets recently. This comes after the El Salvador government passed Bitcoin as a legal tender, meaning that the currency can now be used in El Salvador for everything from buying groceries to paying taxes.
Bitcoin is the largest cryptocurrency by market cap, and a good indicator of the crypto market in general, since other coins like Ethereum (and smaller altcoins) tend to follow its trends. Even though Bitcoin recently crossed the $50,000 threshold, it was a pretty normal uptick for the crypto, which has also seen a more than 50% decrease in value in past months. That’s not to say investors should take swings in either direction lightly, and this is also why investing experts recommend not making any major investment changes based on these normal fluctuations.
The cryptocurrency space is still very new, and everything from innovation to regulation can have outsize impact for investors. Here’s how you can invest smartly, regardless of what’s making news or Bitcoin’s price swings.
What You Should Know About Crypto Investing
How Investors Should Deal With Volatility
Cryptocurrency volatility is nothing new, and you should be comfortable with this if you decide to invest.
Volatility can be attributed to an “immature market,” says Ollie Leech, learn editor at Coindesk, a cryptocurrency news outlet. Anything from a celebrity tweet to new federal regulation can send prices spiraling.
“If Elon Musk puts hashtag Bitcoin in his Twitter bio, it sends Bitcoin up 10%,” says Leech.
This unpredictability is part of the reason why investing experts warn against investing huge amounts of your portfolio into a risky asset like crypto. Many recommend keeping your crypto holdings to less than 5% of your total portfolio.
For new investors, day-to-day swings can seem frightening. But if you’ve invested with a buy-and-hold strategy, dips are nothing to panic about, says Humphrey Yang the personal finance expert behind Humphrey Talks. Yang recommends a simple solution: don’t look at your investment.
“Don’t check on it. That’s the best thing you can do. If you let your emotions get too much into it then you might sell at the wrong time, make the wrong decision,” says Yang.
This is the traditional “set it and forget it” advice that many traditional long-term investors follow. If you can’t get on board, and the extreme dips continue to cause you worry, then you might have too much riding on your cryptocurrency investments.
“The most important thing any investor can do, whether they are investing in Bitcoin or stocks, is not just to have a plan in place, but to also have a plan they can stick with,” says Douglas Boneparth, a CFP and the president of Bone Fide Wealth. “While buying the dip might be attractive, especially with an asset that you really like, it might not always be the best idea at the moment.”
Other Recent Crypto News
- The SEC recently charged crypto lending platform BitConnect and its top executives with defrauding retail investors in 2017-2018. The SEC alleges Bitconnect defrauded retail investors of $2 billion through an offering of fraudulent digital assets. “We will aggressively pursue and hold accountable those who engage in misconduct in the digital asset space,” said Lara Shalov Mehraban, Associate Regional Director of SEC’s New York Regional Office, in a statement. Efforts to reach Bitconnect and the individual defendants named in the SEC complaint were unsuccessful.
- Cuba’s central bank will establish regulations for cryptocurrencies, the country’s Official Gazette reported recently. Its economic interest in accepting crypto payments echoes other nations around the world. Global crypto adoption has soared in the last year, up 881%, according to data from Chainalysis, including countries Vietnam to Pakistan and, recently, El Salvador.
- Visa is the latest company to take interest in non-fungible tokens, or NFTs. The credit card and payments powerhouse recently revealed that it purchased a CryptoPunk NFT worth nearly $150,000. The purchase stems from a goal to “help clients and partners participate,” Cuy Sheffield, head of crypto at Visa, said in a blog post, because the company believes NFTs will play “an important role in the future of retail, social media, entertainment, and commerce.
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