Bitcoin could be headed for a breather in the new year.

The red-hot cryptocurrency continued its longest monthly win streak in more than a year on Monday after grazing a new all-time above the $28,000 mark on Sunday.

Based on the charts, that run might be put on pause come 2021, Mark Newton, founder and president of Newton Advisors, told CNBC's "Trading Nation" on Monday.

"It is still quite bullish on an intermediate-term basis given that it just broke out to new all-time highs," Newton said. "I think we have a ways to go. Near term, my cycle composite shows us peaking out in early January."

Bitcoin's weekly chart and relative strength index reflect rising interest in the world's largest digital currency, mostly from institutional investors, Newton said.

Google searches for bitcoin are up some 750% year over year, but still "nowhere near" their highs from 2017, the chart analyst said.

"[With] SPACs right now, you can make money at 10, 15, 20% a day," he said. "I just don't think that investors have quite the appetite for crypto while the institutions are certainly very much heading in that direction."

Newton's other chart which uses three different bitcoin cycles, the main one being 273 days, to track changes in the cryptocurrency's path hints at an upcoming turn in bitcoin's direction.

"All those years where we had a stellar Q4 we reversed course in trend back in late December, early January, and actually went lower," he said. "So, I think there will be some opportunity [for] investors to be able to buy dips in crypto and bitcoin particularly."

Newton, who is long bitcoin, ethereum, litecoin and several other digital currencies, said he would look to sell out of his positions "in the next one or two weeks."

"I think there will be some opportunity to buy dips into Q1 of next year," he said.

Boris Schlossberg, managing director of FX strategy at BK Asset Management, said the institutional interest in bitcoin "bodes well for the asset."

"Can it go to $50,000? Absolutely," he said in the same "Trading Nation" interview, cautioning that "if you are looking to trade or invest this asset, you have to have the mentality that it's going to have a huge amount of volatility."

"As to the ultimate valuation, it's impossible to say, but one interesting measure: If you look at the tulip mania, at the peak of tulip mania, one tulip was worth basically about one house," Schlossberg said. "If you do use that kind of valuation, then it still has a long way to go because its ultimate terminal valuation could be $150,000, $200,000 before the whole move kind of exhausts itself. So, as many people have said, there's still quite a lot of potential, but there's certainly going to be massive volatility while we get there."

Disclosure: Newton is long bitcoin, ethereum, litecoin and several other cryptocurrencies along with closed-end trusts for bitcoin cash and ethereum.

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Chart points to bitcoin peaking out in early 2021, trader says - CNBC

An illustration of bitcoin on Euro banknotes.

Nicolas Economou | NurPhoto via Getty Images

Bitcoin on Wednesday jumped to a record $28,599.99, after the digital currency almost quadrupled in value this year amid heightened interest from bigger investors.

The world's most popular cryptocurrency was last up 2.3% at $28,012. It has surged by nearly half since breaking $20,000 for the first time on Dec. 16.

Bitcoin has increasingly seen demand from larger U.S. investors in particular, attracted by its perceived inflation-hedging qualities and potential for quick gains, as well as expectations it would become a mainstream payments method.

Investors said limited supply of bitcoin - produced by so-called "mining" computers that validate blocks of transactions by competing to solve mathematical puzzles - has helped power upward moves over recent days.

Many recent entrants to the market are holding onto positions, they said.

"The supply side to the bitcoin market will remain tight," said Jacob Skaaning of crypto hedge fund ARK36.

The latest gains took bitcoin's market capitalization past $518 billion, according to industry website CoinMarketCap.

Other major cryptocurrencies, which tend to move in tandem with bitcoin, were flat. Ethereum, the second biggest, was down 0.4%, on track for a 2020 gain of around 465%.

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Bitcoin jumps to record $28,600 as 2020 rally reaches new heights - CNBC

Sitting on a growing bitcoin fortune? Consider giving away some of it to charity.

As 2020 draws to a close, the cryptocurrency has seen a massive surge in appreciation. The value of a single unit of bitcoin is now hovering around $28,000.

Though longtime holders of the virtual currency are rejoicing, they run the risk of winding up overweight in bitcoin. That is, the massive run-up in values could suddenly result in investors having more exposure toward bitcoin and its risks than they'd like.

Similarly, while cashing out of your holdings might seem attractive, it could come with a hefty capital gains tax bill on the appreciation.

More from Advisor Insight:How financial advisors say to use your $600 stimulus checkHere's who's likely eligible for a second stimulus checkCovid relief bill adds PPP tax breaks the Treasury opposed

That's where charitable giving comes into play.

"We believe in asset diversification, and because the price of bitcoin rose significantly, investors could be overallocated based on their targets for their portfolio," said Stefan Podvojsky, senior vice president of Fidelity Charitable.

"A donor advised fund provides a great outlet to remove that overweight and support the philanthropy that is important to the donor," he said.

Indeed, investors in bitcoin have been able to donate their holdings to donor-advised funds via Fidelity Charitable since 2015.

Benefactors have given close to $26 million in bitcoin to Fidelity Charitable's donor-advised funds year to date as of Dec. 29.

Donor-advised funds are accounts generous investors can fund with a variety of assets and use for making grants to their favorite charitable causes.

Nevertheless, giving away bitcoin and other crypto assets can come with a unique set of hurdles, including price volatility and additional tax reporting on the part of the investor.

Mykola Tys/ | LightRocket | Getty Images

Though you can convert cryptocurrency into dollars, the IRS regards it as property for income tax purposes.

This means you're subject to capital gains taxes if you decide to sell or exchange your virtual currency holdings.

The magnitude of the tax hit will depend on how long you've held your bitcoin if it's at least a year, you may qualify for the long-term capital gains rate of 0%, 15% or 20% and your cost basis in the asset.

Investors who snapped up bitcoin when it was especially cheap consider that one bitcoin was worth $7,220 Dec. 30, 2019 may face the harshest tax consequences when they sell or exchange it.

2020 income tax brackets

IRS

That's because the tax would be based on the difference between their cost basis and today's market price.

Meanwhile, donating an asset you've held for at least a year will allow you to claim a tax deduction based on its fair market value.

"Donating it could be incredibly tax-conducive," said Bryan Clontz, founder and president of Charitable Solutions, a firm that specializes in receiving and liquidating noncash assets for charities.

"It's the holy grail of charitable planning: a low basis, highly appreciated asset," he said.

We believe in asset diversification, and because the price of bitcoin rose significantly, investors could be overallocated based on their targets for their portfolio.

Stefan Podvojsky

senior vice president of Fidelity Charitable

Another reason why donating crypto via a donor-advised fund might make sense: Your favorite charity may be skittish about accepting direct contributions of virtual currency due to data security issues.

"The big issue for charities is the volatility and the risk that if you set up your own wallet, wallets can be hacked," said Greg Sharkey, senior philanthropy advisor at The Nature Conservancy, a charity in Arlington, Virginia.

The organization teamed up with BitPay, a bitcoin payment service provider, to accept donations and convert them to cash.

"If the donor calls this morning and wants to make gifts and does it through BitPay, the money would be at the charity's account tomorrow," said Sharkey.

What makes cryptocurrency so complex is the fact that not only are these assets subject to price volatility, but they also trade constantly.

Generally, the deduction a donor can claim is based on the price of the asset on the date they relinquish control to the donor-advised fund.

Fidelity Charitable only trades bitcoin during New York Stock Exchange market hours, or 9:30 a.m. to 4 p.m. Eastern, on weekdays, said Podvojsky.

"Depending on when during the day you might transfer the bitcoin to us, you would be subject to the price in the market and the liquidity we would be able to obtain at that point in time," he said.

Investors hoping to claim a tax deduction for their donation have extra legwork.

Because they're giving away a special asset, they must obtain a qualified appraisal from a third party and file Form 8283 with the IRS.

"Roughly $500 to $600 per appraisal would be the market for this space, and you'd have to have a larger donation to make it worth it," said Clontz. "There's a cost to the donor, and it's not just five minutes of work."

Giving away those appreciated bitcoin holdings and collecting a tax write-off isn't just a one-person effort. Here are a few considerations:

Correction: New York Stock Exchange market hours are 9:30 a.m. to 4 p.m. Eastern on weekdays. An earlier version misstated the times.

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With bitcoin ticking over $28,000, now might be a good time to give some of it to charity - CNBC

A worker uses a handheld cleaning tool to clean application-specific integrated circuit (ASIC) ... [+] devices and power units mounted in racks inside the BitRiver Rus LLC cryptocurrency mining farm in Bratsk, Russia, on Friday, Nov. 8, 2019. Bitriver, the largest data center in the former Soviet Union, was opened just a year ago, but has already won clients from all over the world, including the U.S., Japan and China. Most of them mine bitcoins. Photographer: Andrey Rudakov/Bloomberg

Decentralization means different things for different people. It can also be applied to a variety of different variables, from the technological to the cultural. How much of bitcoins cultural aesthetic is what keeps block size (within the network) or the number of bitcoins fixed? How much of decentralization is the technical balance between miners, nodes, and other stakeholders in the network that accords each different powers and responsibilities?

An increasingly common argument among those criticizing the decentralization of proof-of-work systems is the centralization brought by lower hardware and electricity costs and the high degree of mining hash rate concentrated in Chinese mining pools. This has, for example, been a long-standing thread that has been pushed by Ripple CEO Brad Garlinghouse, with the Ripple team also making allegations that both ethereum (in its current proof-of-work consensus algorithm) and bitcoin are controlled by China as a result of the mining pool concentration.

The first thing to understand about this argument is that mining pools command loyalty not based on geographic traits or even political ones, but rather, reward types, fees, and how the pool deals with bitcoin transaction fees.

Mining pools might have a geographic base, but miners that pledge their hardware and their hash rate might not and can switch their loyalty depending on a host of factors. Its important then to look at the hash rate of a mining pool not as one monolithic bloc that can be controlled and manipulated at will, but rather as a marketplace or as an aggregator that commands a fickle amount of loyalty. At any given time, if the rewards and technical conditions of mining pools change, there can be a shift towards mining pools based in Europe or North America or anywhere else in the world.

Mining pools based in China are also running contrary to state policy. The Peoples Republic of China has a skeptical view towards bitcoin and other cryptocurrencies. This included concrete policy such as the central government asking local governments to step out of bitcoin mining.

Everything from energy usage to dissident activity has been cited as reasons to cut down power supplies to bitcoin miners. Several bitcoin miners have actually left the country as a result and looked to seek refuge in countries like Canada. In a sense, this is a more philosophical and general argument, but it speaks to how peoples are not tied exclusively to their states despite what those states would lead you to believe.

Chinese bitcoin mining pools and bitcoin miners are acting as a sort of dissent within the Chinese political system. While some local governments may support them, the central government in China has strongly embraced blockchain and its own central bank digital currency (DCEP) while shunning cryptocurrencies. Miners themselves are highly nomadic within China, with many shifting from different regions depending on the weather and its implications for electricity rates.

While their incentives may not be bereft of financial interest (and in fact, are probably principally motivated by money), to blame the mining pools for being based in a certain nation and being controlled or blindly loyal to a government flies in the face of the facts on the ground. Mining pools are more loyal to whichever incentives help them make more value. Miners in turn are loyal to whichever pool supports their stance on bitcoin and their best rewards.

Bitcoin miners derive value from bitcoin and other proof-of-work cryptocurrencies if the health of these networks would decline, then the fixed investments they would have made in ASIC mining equipment would be worthless. Their interests are aligned to the bitcoin network and this plays a larger role in their decisions from what to do during a fork to where they put their hash rate.

Miners are also not the only institutions that matter in the balance of proof-of-work blockchains. Nodes are run around the world. The coders that build up the framework of cryptocurrencies are distributed around the world, with US-based institutions such as cryptocurrency exchanges and non-for-profits like the Human Rights Foundation providing funding.

Theres a careful checks and balance in any proof-of-work built from a cultural aesthetic towards decentralization that involves different stakeholders no one group can shape the complete destiny of proof-of-work based cryptocurrencies like bitcoin.

Yet, the idea of geographical centralization is a concern, albeit one that has been exaggerated by those who want to paint bitcoin and ethereum in a certain light. It is factually correct to say that Chinese bitcoin mining pools control a large amount of the hash rate that powers bitcoin, for example. A study in 2019 estimated that there was about 65% of the hash rate within China itself. This was largely due to cheap hydroelectricity (especially in areas such as Sichuan), and close connections between hardware manufacturers based in China and mining pools/miners with the best claim to established relationships.

Yet with the establishment of stable capital markets around bitcoin mining (with certain companies having gone public), bitcoin mining has the potential to be more globally distributed and decentralized from geographical risk. As hardware supply chains and global power distribution come into question with warnings of decoupling economies, its entirely possible that this shift will help auger a more distributed bitcoin and cryptocurrency mining network, helping allay the threat of centralized geographies.

In a debate mirrored from geopolitics, the idea of Made in China vs. elsewhere has come to rest with globally distributed proof-of-work networks. Yet the analogues are not perfect because miners tend to be more loyal to the network rather than the state, more loyal to electricity prices and fees than anything else.

An effort to solve the geographic centralization problem in mining hardware is to be applauded and is well under way and can be helped with stable regulations, capital markets, and lower electricity prices as well as changes in hardware supply chains from anywhere in the world.

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The Chinese Mining Centralization Of Bitcoin And Ethereum - Forbes

Bitcoin has surged past $29,000 to reach yet another record level on the last day of 2020, showing no signs of slowing down its torrid December rally. Bitcoin has almost quadrupled in value this year amid the global coronavirus pandemic. Will this rally continue? Experts see great going for the largest cryptocurrency in the world in future mainly due to the recent institutional adoption. "Bitcoin would cross 50K USD, There is a lot of institutional adoption happening over the past few months. The first trigger for that was Paul Tudor Jones, who was one of the legendary traders out there and post that the firms like Guggenheim, Fidelity, Blackrock, stated that Bitcoin has the potential to replace gold as a store of value," says Gaurav Dahake, CEO, Bitbns.

Crypto market experts say as the institutional investment in bitcoin increase, the currency will see stronger support during price dips." Bitcoin is different from established markets like stocks or commodities because a lot of new buyers are still coming in. As more companies and individuals shift savings into bitcoin, we may see stronger support during price dips. While a correction is inevitable, it may not be that deep. No one can predict the future, but Bitcoin could easily go to 30 lakh or more in 2021," says Rahul Pagidipati, CEO, ZebPay.

Also Read | The march of 2020 in 10 key long reads

At present, in INR terms a bitcoin is priced over 21 lakh .

However, wealth managers caution retail investors and ask them to strictly avoid investing in bitcoin. They believe the prices have been highly volatile, completely driven by speculative forces.

"The only thing real about bitcoins is that they are in limited quantities and are mined after a tech driven process. But beyond that, there is no underlying basis on what price should they be traded. Retail investors should definitely avoid such high risk bets as if mistimed they can lose substantial parts of their capital," says Raghvendra Nath, Managing Director, Ladderup Wealth Management.

While there are no clear fundamentals driving the price movement of bitcoin, regulation is another limitation, say the independent financial advisors.

"There are no clear fundamentals that drive the price movements of bitcoin. Demand and Supply drive the price. That's all. There is no underlying asset for bitcoin. So the valuation is fictitious. As there is no 100% regulation and acceptance, there is a lot of grey area in bitcoin investments," says Ramalingam K, Chief Financial Planner, holisticinvestment.in.

While the current trend in the price movement might be luring for investors, IFAs advise to avoid getting greedy and invest in real assets to avoid big losses in the short term.

"It is always advisable to invest in real assets where the volatility is controlled even though the returns may be more reasonable. At least the power of compounding can ensure that the retail investors' wealth grows over long term," says Nath.

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Bitcoin price soars four times in 2020. Key things to know - Mint

Bitcoin is currently on its longest winning run since 2019. Bryan Routledge, Associate Professor of Finance at the Tepper School of Business, Carnegie Mellon University, joins Yahoo Finance Live to break down how Bitcoin rallied to record levels this year and the outlook for crypto in 2021.

- Bitcoin at a record once again. It touched above 28,000 overnight. And it has had quite a run thus far in 2020. Hasn't had the end pullback that we saw, for example, in 2017. Let's talk more about what could happen next for Bitcoin as well as for the bigger cryptocurrency complex.

Brian Rutledge is joining us now. He's an Associate Professor of Finance at Carnegie Mellon University Tepper School of Business. He has written a lot about cryptocurrency, but about blockchain as well.

And it's actually there, Brian, that I want to begin because as Myles my co-host has pointed out frequently, the blockchain conversation is definitely not as prominent now as it was in 2017. The focus has really come in on Bitcoin and its rise. Do you think that that's sort of a mistaken perception? Do you think that there is still-- I mean, is-- is blockchain out there? Is-- how much is it being used? And what's sort of the use case as we move forward?

BRIAN RUTLEDGE: Wow. OK. Lots packed in there. I think the-- the thing-- the thing to appreciate about Bitcoin and its rise in price-- I mean, 28,000 is remarkable. 3,000 was remarkable for Bitcoin in the sense it is built on blockchain technology. And so I think the fact that you're not talking about it is, in some sense, an acknowledgment that blockchain technology is effective. So it is big dollars that are in Bitcoin that are built on this underlying-- underlying blockchain technology of competitive decentralized recordkeeping.

And if you had asked me in 2013 if this was going to be viable, I certainly wouldn't have said yes. And so I think the-- some of the price of Bitcoin is a bit of a mystery in the sense of why it has quadrupled over the year. But the fact that it is what it is I think is a validation that the blockchain technology is real and effective.

Story continues

And then the second half of your question, I think, is, what's the sort of killer app for blockchain technology that's waiting to happen? I think that is still unanswered. And it is a very good question in the sense of, where will blockchain technology go beyond just, say, record keeping on who owns Bitcoin?

- You know, Brian, the perspective that I have on Bitcoin is basically from Finance Twitter and public media, so it's everyone bragging about how smart they are because they own all these coins and they went up a lot. I'm curious how your students-- what your conversations with your students are like as it relates to the entire crypto space, what they're interested in right now.

BRIAN RUTLEDGE: I mean, it is-- an awesome thing to put on your syllabus is cryptocurrency, blockchain technology. You just-- you track students. It is-- I think it's a really interesting and attractive thing for a student in the same way it's an interesting, attractive thing just in general in the sense of, it is a mashing up of economics and business with the underlying technology of cryptography and distributed computing.

And so there is really interesting technology problems that are there. And then, there are really interesting business problems. And so it-- it-- it's a rich, fun topic to teach because the students are just-- they're keen.

- Brian, just based-- based on your understanding of Bitcoin and its history and where it's been this year, do you think what we're seeing in terms of price action reflects that at some point in our lifetimes, Bitcoin might be a viable replacement to the dollar?

BRIAN RUTLEDGE: That's a good question in the sense of, what is it people are buying Bitcoin for and the sort of speculation? But the two things that people might be thinking about-- one is it's an alternative to something like gold. And we think about-- gold is not sort of an alternative to the dollar, but people hold it in their portfolio as, say, a hedge against inflation. We don't use gold in our everyday transactions.

The price of gold is much higher then the intrinsic value of gold you would find. And so people moving into cryptocurrencies or Bitcoin as a, here is something that is commodity-like that is independent of, say, the Federal Reserve, and I want to hold that as a hedge against inflation. That-- that-- that is not a-- that's a sensible argument. It's belayed a bit by the fact that the price of Bitcoin is stunningly volatile. It's orders of magnitude more volatile than the price of gold or even the stock market.

And then, I think the second sort of reason that people might think about Bitcoin as something they want to own is, it is perhaps access to this blockchain technology in the sense of, I want to own a piece of this future technology. And there, I think-- you know, like all bets, it's risky.

And the bet there is twofold. One would be that blockchain technology indeed will be something new and useful. And then the second part of that is that Bitcoin would be relevant in that, I don't know, blockchain-enabled future.

And I guess-- when thinking about that one, if you go back to, I don't know, the internet in the 1990s and thinking about, gee, I want to-- I think this is going to be revolutionary, it was pretty hard to see where the internet was going, and harder still to pick, I don't know, Amazon over Pets.com or Netscape or somebody.

- Yeah. And most people-- a lot of people didn't do that correctly, certainly. I mean, but speaking of forecasting, Brian, you received a grant from the International Institute of Forecasters for your work on forecasting. When it comes to Bitcoin price, is there any way to even do it with any degree of accuracy?

BRIAN RUTLEDGE: The financial prices in general are hard to forecast in part because everybody is trying to forecast them, so the famous or book of Burton Malkiel of a random walk down Wall Street is still applicable in the sense that, for the most part, prices go up or down with almost equal probability per day. There's lots of people trying to sort of find some wedge of a signal in there to predict the price of Bitcoin.

The-- the-- if you do have some-- so, no. I have no forecasting ability. If you think you have some forecasting ability, Bitcoin prices are attractive in the sense that they are just so volatile, right? And if-- if you think you can forecast something, predicting, forecasting something that's volatile lets you make a lot of money.

- Yes, it does. And a lot of people certainly have done that even if their forecasts have been wrong. So we'll see what happens next year. Brian, thank you so much. Happy new year to you, and we'll see what ends up happening with those Bitcoin prices.

Brian Rutledge is an Associate Professor of Finance at Carnegie Mellon's David Tepper School of Business. Thank you so much.

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Associate Professor of Finance on Bitcoin rally: Blockchain technology is real and effective - Yahoo Finance

Carolina Panthers offensive tackle Russell Okung will be the first professional athlete in any U.S. league to receive Bitcoin as a form of payment.

WASHINGTON NFL Carolina Panthers offensive tackle Russell Okung will be the first player to be partly paid in Bitcoin.

In May of 2019, he tweeted asking to be paid in Bitcoin. On Tuesday, he confirmed that he will indeed be paid by the digital currency.

"Paid in Bitcoin," he tweeted.

Okung, who is had a $13 million salary in 2020, will receive half of it in Bitcoin, according to a press release from Strike, a company that helps users convert traditional money to the cryptocurrency. He will be the first professional athlete in any U.S. league to receive Bitcoin as a form of payment.

Money is more than currency; its power, the two-time Pro Bowler said in a statement. The way money is handled from creation to dissemination is part of that power. Getting paid in Bitcoin is the first step of opting out of the corrupt, manipulated economy we all inhabit.

NFL Network said Okung's U.S. dollars paycheck will go into an account that's controlled by Strike. There it will convert to Bitcoin before going to Okung.

HOW DOES BITCOINS WORK?

Bitcoin is a digital currency that is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who mine them by lending computing power to verify other users transactions. They receive bitcoins in exchange. The coins also can be bought and sold on exchanges with U.S. dollars and other currencies. Some businesses also accept bitcoin, but its popularity has stalled out in recent years.

HOW BITCOINS ARE KEPT SECURE

The bitcoin network works by harnessing individuals greed for the collective good. A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction. The blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts by being gifted with the occasional bitcoin. As long as miners keep the blockchain secure, counterfeiting shouldnt be an issue.

HOW BITCOIN CAME TO BE

Its a mystery. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto. Bitcoin was then adopted by a small clutch of enthusiasts. Nakamoto dropped off the map as bitcoin began to attract widespread attention. But proponents say that doesnt matter: The currency obeys its own internal logic.

In 2016, An Australian entrepreneur stepped forward and claimed to be the founder of bitcoin, only to say days later that he did not have the courage to publish proof that he is. No one has claimed credit for the currency since.

The Associated Press contributed to this report.

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Russell Okung to become first NFL player paid in Bitcoin - KHOU.com

What happened

If you're looking for a nonvolatile investment, stocks related to bitcoin aren't a good place to look these days. The price of bitcoin has gone up around 150% over the last three months. During that time, many bitcoin-related stocks have made big daily moves -- sometimes up, sometimes down.

Today was a down day. CleanSpark (NASDAQ:CLSK) stock fell 8% but had been down 16% earlier in the day. Shares of Xunlei Limited (NASDAQ:XNET) likewise traded 9% lower. For its part, Bit Digital (NASDAQ:BTBT) stock recovered from a 20% plummet early in the day, finishing flat.

CLSK data by YCharts

To be clear, the only one of these three companies that has reported anything lately is CleanSpark. On Dec. 28, CleanSpark had two filings with the Securities and Exchange Commission (SEC). These filings showed that two directors increased the amount of CleanSpark stock they own. Typically, increased insider ownership is a bullish signal. However, in this case, both directors were merely compensated 740 shares each -- they didn't actually buy shares with their own cash. So this news doesn't really have an actionable takeaway for investors.

Generally speaking, stocks like CleanSpark, Bit Digital, and Xunlei Limited march to the beat of bitcoin's drum. If bitcoin is rising, they go up. If bitcoin is falling, they go down. But this generalization has limits. They rarely move by the same percentage point as bitcoin. In fact, they're often much more volatile. Therefore, predicting their movements day by day is impossible.

For example, according to CoinDesk, the price of bitcoin has changed less than 0.5% over the past 24 hours -- that's pretty stable. Nevertheless, CleanSpark, Bit Digital, and Xunlei Limited are making big moves without any news of their own. The reason for this disparity, in my opinion, is short-term traders.

CLSK Volume data by YCharts

As the above chart shows, these stocks are trading hands at a staggering pace, with Bit Digital's trading volume surging in particular. For perspective, the trading volumes for CleanSpark and Xunlei Limited are comparable to that of one of the biggest companies in the world: Amazon. Considering these are all small-cap stocks, it's outrageous for their trading volume to exceed that of large-cap companies like Amazon.

Due to high trading volume with these stocks, it's highly likely a large percentage of shareholders are thinking short term, looking to make some easy money. They're smart enough to know that as the price of bitcoin rises, CleanSpark, Bit Digital, and Xunlei Limited will receive greater visibility from investors. But their ultimate goal is trading in and out for outsize gains.

Image source: Getty Images.

A company's intrinsic value doesn't change very much over short periods of time. Therefore, trading stocks over a short period has little to do with fundamentals -- you're simply hoping to outsmart some stranger on the other side of the trade. Consider that every time you buy a share, someone is selling it. And every time you sell, someone is buying. You're the smart one (or so you've told yourself) and you're counting on someone else being the greater fool.

In practice, I don't personally know anyone who trades frequently over short periods of time and consistently outperforms the market averages. That's why I advocate for investors to enlist a powerful ally to achieve superior gains: time. Over time, companies do create or destroy shareholder value, something much easier to forecast.

The three bitcoin-related companies we looked at today -- CleanSpark, Bit Digital, and Xunlei Limited -- are all very different businesses. Investors shouldn't plop down their hard-earned dollars unless they understand what each one does, how it can create value, and what could go wrong.

Here's a brief overview of each company to get you started. First, Bit Digital is a pure-play bitcoin-mining operation. The company has been mining the cryptocurrency since February, and has mined over 1,300 bitcoin tokens since then.But its operating costs are robbing it of profits, keeping me on the sideline.

Next, Xunlei Limited operates a blockchain-as-a-service business in theory. But in reality, the only part of its business that's growing is its mobile advertising segment. That doesn't inspire much confidence from me.

Finally, CleanSpark's primary business focus is related to making the consumption of electricity more efficient. Mining bitcoin is an energy-intensive process. So the company's bitcoin-mining operation is less about bitcoin and more about demonstrating the ability of its technology. Considering power consumption is a big environmental concern that's only getting worse, CleanSpark could be solving an important problem.

CleanSpark's revenue has doubled for three consecutive years. Given its business growth and the service it offers, it's the most investable of the three companies here, in my opinion. However, more in-depth (and necessary) research would shed light on the long-term value proposition.

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Bitcoin Stocks Continued Their Volatile Ride on Tuesday - The Motley Fool

Fred Pye, chief executive of 3iQ , which in April launched a Toronto-listed Bitcoin fund that has grown to roughly $400 million in market capitalization, thinks Bitcoin has an edge because it can more easily be used to conduct transactions.

Golds use case is largely a store of wealth, and then its jewelry and possibly gold colouring for windows theres not a lot of uses, Pye said.

He added that supply and demand factors should work in Bitcoins favour as well.

As gold prices go up, it becomes economical to mine gold deposits that were previously considered too low-grade to profitably exploit. That means increases in the price of gold should help the supply grow.

Meanwhile, Bitcoins supply growth rate is algorithmically fixed to drop in half every four years.

Right now, Pye said, the supply of both gold and Bitcoin is growing at about four per cent per year.

While that may persist for gold, new Bitcoin will become much harder to come by when the growth rate drops to two per cent in 2024.

I think theres some short-term risks to Bitcoin, but the reality is the long term is so rosy, he said.Pye forecast that in 2021 the price of bitcoin would hover between US$20,000 and US$30,000 and that by 2022, it would reach $50,000.

Theres some short-term risks to Bitcoin, but the reality is the long term is so rosy

Fred Pye, chief executive, 3iQ

Grosskopf, meanwhile, said he believes gold has a digital future that will improve its value as a currency as well.

Im still a huge believer that the biggest thing that will ever happen to gold is it will go digital, he said, noting that such a move would allow the metal to be stored in a central location while ownership is being tracked on a blockchain ledger much the way Bitcoin is. What digital gold will be is one standard, one denomination, stored where its quoted to be stored. You never have to move it, but its on the blockchain. The two (Bitcoin and gold) are going to come together.

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Showdown 2021: Why Bitcoin and gold investors may both be right in the year ahead - Financial Post

Continuing its upward rally, the world's most popular digital currency, Bitcoin, touched another record high of $28,600 on Wednesday, recording a 4.4 per cent surge from its previous high. The cryptocurrency has surged nearly half in just 15 days since it achieved the psychological milestone of $20,000 on December 16. The main reason for the rising Bitcoin streak may be bulk buying by big US investors. They expect to make quick gains amid some positive developments around the cryptocurrency, including speculations that it could become a mainstream payment method.

Bitcoin has seen an unprecedented rise this year, with its value witnessing a 240 per cent jump in 2020, giving investors better returns than other traditional mainstream investment platforms.

Since its meteoric rise in December, Bitcoin's market value has now exceeded $500 billion, as per Coindesk, a cryptocurrency platform. This is more than $460.06 billion m-cap of Visa, the world's biggest financial service company, as per the Companiesmarketcap data. Both, however, are different and may not be compared: Visa is for-profit financial business while Bitcoin peer-to-peer software system.

Not only Visa, but Bitcoin is valued more than biggest publicly traded companies like Samsung ($463.63 billion) and Walmart ($406.00 billion), the data shows.

Also read:Bitcoin sprints over $27,000 mark; rises over $2,500 in 2 days

A major jump in Bitcoin price -- from $5,000 to $25,000 -- was seen after PayPal - the online payment major - announced in March that it'll enable its account holders to use Bitcoin. This marks a colossal 400 per cent increase in the past eight months. ZebPay, one of India's largest cryptocurrency exchanges, has predicted that Bitcoin's value could hit over $135,000 by 2030.

Meanwhile, as the popularity of Bitcoin grows, the Indian government is planning to impose 18 per cent GST on its transactions. The Central Economic Intelligence Bureau (CEIB), an arm of the union finance ministry, has put forward a proposal to impose 18 per cent GST, saying it could potentially gain Rs 7,200 crore annually on bitcoin trading. The CEIB came to the conclusion based on a study on levying GST on cryptocurrencies.

Also read: Bitcoin hits $25,000-mark; 400% increase since March

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Bitcoin's rally continues! Digital currency hits another high of $28,600 - Business Today