Leading cryptocurrency Bitcoin crossed the $9,000 mark for the first time since May 2018 amid the hype over social media giant Facebook and its latest cryptocurrency offering.
Instead of checking their banks to ensure their direct deposit went through, Facebook employees could open their cryptocurrency wallets on pay day as the social media giant will be rolling out its own digital currency soon. This news is setting the cryptocurrency space abuzz with optimism as Bitcoin reached a high of $20,000 near the end of 2017 and fell over 70 percent since, but is climbing back to prominence again following this news.
“We believe this may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams,” RBC analysts Mark Mahaney and Zachary Schwartzman said in a note Thursday evening.
“We believe Facebook will use crypto to facilitate a platform for: 1) Payments; 2) Commerce; and 3) Applications & Gaming,” Mahaney and Schwartzman said.
A year ago, the plan for Facebook to roll out its own form of cryptocurrency was set in motion when the company appointed former PayPal executive David Marcus to begin exploring the opportunity. Since then, rumors swirled that Facebook was developing its own digital currency that would allow its users to store, trade, and exchange for regular currency via apps like Messenger and WhatsApp.
Facebook CEO Mark Zuckerberg was already hinting that new ventures like cryptocurrency would help diversify the company’s revenue streams, which relies heavily on advertising.
“When I think about all the different ways that people interact privately, I think payments is one of the areas where we have an opportunity to make it a lot easier,” Zuckerberg said at Facebook’s F8 annual software developer conference in San Jose, California.
The Non Crypto Safe Haven Play
At its height, cryptocurrency was viewed as “digital gold,” but actual gold bulls can look to ETFs like the SPDR Gold Shares (NYSEArca: GLD) and SPDR Gold MiniShares (NYSEArca: GLDM), while short-term traders can also play the gold market through miners via the VanEck Vectors Gold Miners (NYSEArca: GDX), Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG) and the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT).
For gold as well as other exposure to commodities for diversification, investors can consider funds like the VanEck Vectors® Real Asset Allocation ETF (NYSEArca: RAAX). RAAX uses a data-driven, rules-based process that leverages over 50 indicators, including technical, macroeconomic and fundamental, commodity price, and sentiment. Using this data, it allocates across 12 individual real asset segments in five broad real asset sectors.
The aforementioned indicators identify the segments with positive expected returns. Using correlation and volatility, an optimization process determines the weight to these segments with the goal of creating a portfolio with maximum diversification while at the same time, reducing risk.
One of the allocations the fund added as of late was opportunities in gold. With the latest announcement by the Federal Reserve that it would continue to keep interest rates in check, this could mean for strength for gold if the dollar weakens.
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