Last Updated on March 19, 2020
The price of Bitcoin surpassed $10k on Sunday, leading the way among cryptocurrency.
- Bitcoin passed the $10k mark late Sunday.
- The price of other Altcoins have increased, such as Ethereum and Litecoin.
- Investors can use retirement funds to purchase Bitcoin and avoid complex IRS taxation on cryptocurrency.
The Price of Bitcoin Surpasses $10k
Late Sunday, Bitcoin was at $10,129, a 41% increase from this time last year. As of writing this article, Bitcoin has dropped to $9,825.41. Despite the slight drop, the world’s most popular and oldest cryptocurrency is running strong. According to Coinmarketcap.com, Bitcoin’s market cap has risen to $183.4 billion.
Bitcoin isn’t the only cryptocurrency performing well. Ethereum is up 78% higher year to date. Ripple is up 49%, Bitcoin cash is up an astounding 121%, while Litecoin is up 88% year to date.
Some of the world’s largest companies that allow clients to purchase cryptocurrencies with their IRA claim their clients have seen strong returns by adding crypto to their retirement accounts. This report coincides with many investor’s crypto gains in the first month of 2020.
In January, investors who purchased cryptocurrency (the accumulation of Bitcoin, Ethereum, Litecoin and other major Altcoins) generated an average return of 11.6%. Compare this to investors who predominantly invested in stocks: they reported a loss at the end of January, 2020.
Bitcoin Has Staying Power
Despite what a handful of dubious investors may think, Bitcoin is here to stay. In fact, despite its volatility, industry experts recommend that investors purchase Bitcoin to diversify their investment portfolio. Whether you use personal funds or retirement funds for your investments, diversification is key to protecting your assets and reduce risk. Because cryptocurrency has a very low correlation to most other investments, industry experts advise the purchase of crypto.
If you are concerned about the volatility of cryptocurrency, only purchase 1%. One percent seems to be the lucky number for Bitcoin investments. By investing only 1% of funds in Bitcoin, this won’t drastically harm your finances if the investment plummets. But it could be enough to satisfy investment diversity and maximize returns. Nevertheless, investors should perform due diligence on cryptocurrency as well as the blockchain technology behind it. Finally, be prepared to lose most or even your entire investment.
Bitcoin Investments with a Self-Directed Retirement Plan
Using your retirement funds is a great way to purchase Bitcoin and other cryptocurrency, due their complex taxation. The IRS states that cryptocurrency should be treated like property from a tax standpoint, making it difficult for investors to keep track of the value of every transfer. However, the IRA and 401(k) are tax-exempt entities, thus, investors no longer have to worry about detailing capital gains and losses on Form 1099-K.
Unlike a Traditional IRA, a Self-Directed IRA allows investors to purchase alternative investments, such as Bitcoin, with their IRA funds. All income and gains on the investment will be tax-deferred or tax-free in the case of a Self-Directed Roth IRA.
Unlike a Traditional 401(k), the Solo 401(k) allows investors who are self-employed or business owners with no full-time employees to purchase alternative investments, including Bitcoin, with their 401(k) funds. Again, all income and gains are tax-deferred or tax-free in the case of a Roth Solo 401(k).
When establishing either a Self-Directed IRA or Solo 401(k), make sure you do it through a passive custodian, such as IRA Financial Trust, IRA Financial Group’s sister company. This way, you will have the freedom to make alternative investments, which you wouldn’t otherwise receive with banks and financial institutions.
For more information on the Self-Directed IRA and Solo 401(k), contact us directly at 800-472-0646.