Bitcoin Market Reacting Negatively to Treasury Secy’s Warnings

There seems to be caution in bitcoin trade lately, as BTC prices went down by 10% from an all time high of $58K, whilst still teetering a bitt below $50K Bitcoin’s phenomenal growth is attributed to support coming from traditional investors, and from major companies that came out with plans of accepting cryptocurrency as transaction payments. However, the eagerness over bitcoin buying was doused by newly-confirmed Treasury Department Secretary Janet Yellen’s recent statements. That she is worried about the potential losses that investors will suffer as results of its extreme volatility as an investment asset.

Treasury Secretary Yellen has made it clear that she does not have a high regard for Bitcoin, calling it an inefficient digital currency and largely used for illegal transactions. While the Treasury Department has been looking into the risks posed by cryptocurrencies to investors not necessarily to ban digital money, but to institute regulations that will curtail their use as payment for financial transactions.

How Wealth Managers are Reacting to the Treasury Secy’s Warnings

While BNY Mellon expressed support for crypto trading, the President of JP Morgan, Daniel Pinto gave CNBC reporters a reluctant view as far as supporting crypto trading is concerned. According to Pinto, the only reason why they are into crypto trading is because clients want them. Suggesting that if it was up to the financial institution, bitcoin is not the best investment product they can recommend to their ultra wealthy clients.

Veteran BTC traders are not as anxious about the recent demonstration of the volatile nature of crypto money, confident that the growth today is not purely out of retail speculative trading. Although bitcoin has reached new heights this year, analysts said that last week’s trading losses have already brought down the year-to-date gain by 57%.

Asset investment strategies are important to the super wealthy because that is how they earn substantial revenue without the need to pay large amounts based on regular income tax rates. The best financial advisers though would only recommend cryptocurrency investment as source of passive income rather than become part of a major financial strategy. After all, the IRS also has special tax treatment for passive income, given its nature as income not derived from active participation in regular business activities.

What pillar wealth management advocates as investment plans and financial strategies to their high net worth clients are based on long and short term financial goals; not only as individuals but for their family members as well.

While some clients are interested in making speculative investments on cryptocurrency trading, they still seek advice from their wealth managers on how much to invest. That way their risk exposure when trading with bitcoin will not result in losses that can negatively impact the financial plans for the year.

Posted by Madelina Feliks