Christmas has come early for the bank’s shareholders with the decision to slightly increase the 2024 dividend – despite a single-digit decline in the net profit and cash earnings.
Beating the market benchmark is never easy, with 72 per cent of Australian actively managed global equity general funds trailing the S&P World Index in the six months to June 30, 2024. Domestic equity funds performed slightly better, albeit against a significantly lower bar set by the S&P/ASX 200 Index.
Regulatory headache for Bitcoin
Since publishing our last article on Bitcoin madness (12th January), where Bitcoin ‘experts’ lobbed astronomical predictions of around $170k to $318k by the end of 2022, it looks like Bitcoin has disappointed in the short-term.
The digital currency went on a mammoth bull run hitting A$52,000 around mid-January, up from $11,622 from the same time last year. Bitcoin bulls say the primary reason for bitcoin’s upward momentum was due to an increase in institutional demand for the cryptocurrency, institutions being hedge funds and family offices. Looking at today’s price, however, leaves me with a bit of a confused expression. Had you invested at the peak; you’d have lost 22 per cent already, that’s an asymmetric return if I’ve ever seen one. That’s a decent amount at a time when equities was booming. Here’s a table we quickly put together to give you a better understanding.
Just about every stock used in the table above managed to finish the month in the black and quite convincingly finish higher than Bitcoin. So what has caused the Bitcoin bubble to burst?
It seems Bitcoin may have received a dose of regulatory reality after US President Joe Biden sent a stern message to anyone using the digital currency for illegal dealings, that they’re days were numbered. The level of this sort of use remains difficult to measure. Biden’s pick to head Treasury, Janet Yellen, also voiced her concerns which investors seem to have read as an indication that a regulatory clampdown was underway.
According to News Corp media, Yellen said “I think many are used, at least in a transactions sense, mainly for illicit financing, and I think we really need to examine ways in which we can curtail their use and make sure that money laundering does not occur through these channels.”
Following the announcement, some Bitcoin ‘experts’ have now revised their predictions to $A26,000 but their reasons for doing so are unclear. One analyst tried to explain that corrections are a natural part of any market and are especially natural in the bitcoin ecosystem.
Correction or bubble burst, the fears of a US regulatory crackdown on Bitcoin are real. But may well be a positive for the long-term potential of crypto currencies. Increasing transparency and regulatory framework will significantly increase the availability and investability of the sector. This may well be very important in the coming years with nearly every asset now overvalued by many measures.
Whether the recent sell off is an early sign of something much deeper is too early to tell. The other thing to keep in mind is that the market has a tendency to spook investors with fear and panic that may very well turn out to be well overdone. The cryptocurrency market is looking for a firm regulatory framework that once and for all removes uncertainty and paves the way for structure, legality, taxation, and trading rules. It also removes the volatility and wild swings that have plagued the crypto since its beginning.
Bitcoin was designed as a peer-to-peer cash system. To work as a currency however, it must be stable. Fix this, and for the first Bitcoin can function as a medium of exchange with a store of value. Surely that’s a positive.
