WGC Proves Bitcoin (BTC) Can Never Replace Gold as Next Go-to Asset

Crypto players are advised by the WGC to reconsider their stance in investing in digital money.
Now, this…
The lingering perception that bitcoin (BTC) is an investment position meant to cushion potential losses against market instability – and will one way or another – substitute gold as a safe-haven asset, has been an interesting fodder for argument among crypto circles.
This week, the London-based World Gold Council – a well-known authority on the precious metal – has made an effort to douse this somewhat nagging concept, with a confirmation that the globally popular virtual commodity tried to hold a candle to being the new gold — but fell short.
The report stated that during the fourth quarter last year, when stock markets around the world suffered a serious beating since 2008, digital currency had a chance to show its mettle as a game-changing investment of the future, much like gold – yet some of the biggest names in the crypto market, like bitcoin, demonstrated drawbacks at the outset, leaving gold to shine, literally, as it always does.
Did it blow up its chance?
“Cryptocurrencies had a prime opportunity to demonstrate qualities associated with havens like gold. However, digital currencies, such as bitcoin, behaved like unstable assets and took a dive while gold rallied,” the report said.
Spearheading the bitcoin-gold advocacy are American rowers and Internet entrepreneurs, Cameron and Tyler Winklevoss – the main figures behind the success of New York-based virtual currency exchange and stewards of Gemini Trust Company.

By the numbers
In an interesting piece of argument, the twins emphasized that bitcoin’s ‘exchangeability’, otherwise known as “fungibility”, makes it a more ideal choice compared to the yellow metal. Cameron, during a television interview with Balancing the Ledger recently, shared that “the only thing gold has over bitcoin is a 3,000-year headstart.”
Be that as it may, however, analysts at the World Gold Council sees it rather differently: “The price behavior of bitcoin resembles a technology stock,” underscoring the crypto’s output in the last four months, which was a paltry 56 percent decline. On the NASDAQ Composite in the same period, Bitcoin was down almost 20 percent, compared to gold which climbed 9.5 percent.
While those who are willing to bet their fiat on bitcoin remain unfazed by this bleak notion, finance experts at the WGC cautioned eager-beavers on bitcoin to be always on the look-out for another market setback.
“This was one of the few periods during which true market stress has transpired since the financial crisis, and should lead investors to re-assess their reasons for investing in cryptocurrencies,” the WGC said.
Bitcoin had its opportunity to outshine gold as the biggest investment of the future. Do you agree?
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Swiss Wallet Manufacturer Tangem to Issue National Crypto for Marshall Islands

Swiss Wallet Manufacturer Tangem to Issue National Crypto for Marshall Islands
Some governments have so much belief in cryptos that are ready to absolutely legalize them. The first jurisdiction to issue a legal cryptocurrency in February 2018 was the Marshal Islands, where authorities ordered the circulation of the digital currency along with US dollar. They have gone further, deciding to have a digital national currency. Such a currency will be issued by Switzerland-based smart card wallet manufacturer Tangem.
The announcement has been made by Tangem that will issue the physical banknotes of the sovereign (SOV) – the world’s first decentralized digital national currency. When issued, SOV will join the U.S. dollar as the official legal tender of the Republic of the Marshall Islands(RMI).
According to the press release, this initiative of issuing physical notes will “ensure all citizens of the Marshall Islands” to “have fair and equal access to their digital currency, whether or not they have [an] internet connection.”
SOV will be completely backed by blockchain technology. Due to the immediate transaction validation, zero fees and no Internet connection requirements for the end users, Tangem banknotes will enable the off-chain physical circulation of the SOV among all SOV holders and will not impose the technical infrastructure burden on the RMI.
Each Tangem card will take the form of a unique physical banknote with a secure blockchain-enabled microprocessor inside. The banknotes are expected to be absolutely transparent and secure. Combining both the advantages of paper notes and blockchain technology, SOV will represent a controllable mechanism of currency issuance and circulation for the state.
David Paul, minister-in-assistance to the President of the Marshall Islands, commented:
“We are excited to bring in Tangem as another reputable and forward-thinking partner on our journey to create the world’s first sovereign digital currency. Tangem will help us ensure all citizens, including those living on more remote outer islands, are able to easily and practically transact using SOV.”
As Tangem co-founder Andrey Kurennykh said, the initiative demonstrates the wider adoption of digital currencies, and for the Marshall Islands, it is a truly revolutionary experiment that can attract a lot of crypto enthusiasts and investors there.
Andrey Kurennykh said:
“We are excited to partner with the Republic of the Marshall Islands to do something that has never been done before: issue a digital currency as official legal tender. As the IMF has noted, the world is moving towards the widespread adoption of digital currencies, and we are excited to support the birth of the new global digital economy.”
Other National Cryptos
SOV is not the first cryptocurrency supported at the governmental level. Everybody has heard of Petro, oil-backed cryptocurrency issued by the government of Venezuela. The President has made a lot of efforts to promote Petro, even forcing local organizations to use it as an official accounting unit and linked the pension system to the Petro.
The launch of the Petro was viewed by the country’s government as a tool to overcome the hyperinflation and to combat with the sanctions imposed by the U.S. Venezuela’s President Nicolas Maduro believes a lot in Petro.
Despite there were some doubts about the existence of this oil-backed crypto, this currency really exists, which has been recently proven.
Swiss Wallet Manufacturer Tangem to Issue National Crypto for Marshall Islands

Fidelity Reportedly Targets March as a Launch Date for Its Crypto Custody Service

Fidelity Reportedly Targets March as a Launch Date for Its Crypto Custody Service
This year will be marked by numerous notable events, as many companies promise to launch new products and services very soon. Among them is Fidelity Investments, the fourth largest financial services corporation based in Boston, Massachusetts. The long-expected Bitcoin custody service will be launched by the company in March this year.
In October 2018, Fidelity floated a new subsidiary called Fidelity Digital Asset Services to provide cryptocurrency storage and trading services to institutional and enterprise clients. Headed by Tom Jessop, the company targets institutional investors and works on cryptocurrency solutions for the commercial space.
Abigail P. Johnson, Chairman and CEO of Fidelity Investments, said then:
“We expect to continue investing and experimenting, over the long-term, with ways to make this emerging asset class easier for our clients to understand and use.”
She added:
“The creation of Fidelity Digital Assets is the first step in a long-term vision to create a full-service enterprise-grade platform for digital assets.”
At the same time, Fidelity Investments revealed its plans to develop custodial solutions for safe and secure storage of digital assets and offer a range of crypto products designed for large investors like hedge funds. As the company promised, its custody solutions would be “cold storage” vaults storing cryptocurrencies.
As Bloomberg reported, Bitcoin storage is to come first. Ethereum custody is expected to be offered next. Those familiar with the matter revealed that Bitcoin custody offering is set to be launched in March.
The company said:
“We are currently serving a select set of eligible clients as we continue to build our initial solutions. Over the next several months, we will thoughtfully engage with and prioritize prospective clients based on needs, jurisdiction and other factors.”
Custody services are quite common in traditional stocks and bonds markets. They involve a third party that holds an asset to reduce the risk of being lost or stolen. Unlike banks, custody services are not allowed to use the stored financial assets to their own ends.
Such services are already offered not only by numerous startups but also by Wall Street professionals, such as BNY Mellon, JPMorgan and Northern Trust that offer custody for assets like money, securities, gold, and diamonds.
However, there are some risks to custody. They include managing cryptographic keys for customers, staving off hackers and staying within compliance boundaries.
Fidelity to Launch Trading Platform
Fidelity Investments is a financial services giant that provides retirement savings and mutual funds. Founded in 1946, the company works with over 13,000 financial institutions and manages $7.2 trillion in assets worldwide.
Fidelity Chief Executive Officer Abigail Johnson is a well-known supporter of cryptos. Under her leadership, the company began mining Bitcoin in 2015 and launched Fidelity Charitable for the collection of cryptocurrency donations. In 2017, Fidelity reported that $69 million was received from that.
At a conference in New York, Abigail Johnson stated:
“I’m a believer. I’m one of the few standing before you today from a large financial services company that has not given up on digital currencies.”
With the launch of Bitcoin custody service, Fidelity hopes to leverage its famous name and goodwill, as well as win over institutional customers keen on digital currency trading. To achieve that, the company is planning to launch its own trading platform and provide client support for investors.
Fidelity Reportedly Targets March as a Launch Date for Its Crypto Custody Service

More Cloudy Skies for Bitcoin (BTC), Ethereum (ETH), Ripple (XRP) Due to Massive Sell-Off

Things don’t seem to be going quite well for Bitcoin these days as it takes a plunge courtesy of an unwelcome selloff that has hounded the crypto market of late.
Not quite there yet
For several weeks, the globe’s benchmark in digital currency – and its hopes for a major rebound in the midst of a what finance experts refer to as a “crypto winter bear market” seem far-fetched at the moment.
Based on the CoinMarketCap index, Bitcoin (BTC) has shed more than five percent over the weekend, with Ethereum (ETH) sliding back by 10 percent while Ripple (XRP) likewise weakened by 10 percent in the same period.
In the same note, Tether has rallied into the Top 5 key virtual currencies in terms of market cap, and is currently valued at a little more than $2 billion, as its 10 coin counterparts move down.
The fresh round of crypto selloff, which has caused bitcoin to plunge as low as $3,321 during the past day on the Bitstamp Exchange, transpires as major finance firms echo their alarm bells with regards the future of virtual money.
To add to what looks like an already gloomy forecast to the volatile situation, latest data indicate that more dark clouds will loom over Bitcoin, Ripple (XRP), and Ethereum (ETH) in the coming weeks.
Losing their momentum
XRP/USD maintains its stance on the bearish trajectory on the medium-term projection. The Bulls have seemed to lose their pace almost entirely on the XRP market since reaching their supply zone of $0.37.
The bearish engulfing candle marked as of January 10 sparked the bearish pace on the XRP market and the coin has since made a steady movement backwards and into the demand border of $0.28 where it is trying to breach the level as of press time.
Let’s take a quick overview of what the overall crypto ecosystem has had to go through of late: Around $400 billion in total market value has been wasted of sorts from the digital money trade since January of 2018, as the cryptocurrency’s massive appeal seemed to have suddenly waned, and banks quickly hatched plans to steer clear of investing in Bitcoin and its major counterparts.
Meanwhile, here’s an interesting take by eToro chief market analyst Mati Greenspan: “The cryptocurrency space was shocked yesterday to see Tether reclaim 4th spot in the market cap rankings,” adding that “The market cap metric is not a great way to gauge the market value of crypto-assets but seeing Tether rise up in the rankings that quick can be a very telling sign of investor sentiment.”
Will Bitcoin and its key counterparts make a rebound this week? Share your opinion with us on the comments below.
The post More Cloudy Skies for Bitcoin (BTC), Ethereum (ETH), Ripple (XRP) Due to Massive Sell-Off appeared first on Live Bitcoin News.

Litecoin to Add Confidential Transactions in 2019, a Privacy Feature Designed For Bitcoin

The founder of Litecoin, Charlie Lee, has said that their focus is going to be placed on making the cryptocurrency more fungible by enabling confidential transactions. The timeline on this is ‘sometime in 2019’. 
Fungibility – the Missing Piece
According to the founder of Litecoin, Charlie Lee, the only properties that Bitcoin and Litecoin is lacking compared to ‘sound’ money is fungibility and privacy.
“Fungibility is the only property of sound money that is missing from Bitcoin & Litecoin. Now that the scaling debate is behind us, the next battleground will be on fungibility and privacy.” – said Lee.
He also explained that his next efforts are going to be focused on making Litecoin more fungible by adding confidential transactions.
Addressing some of the questions to his statement, Lee explained that the update should take place ‘sometime in 2019’ without committing to a flat date.
Additionally, he also explained that this update wouldn’t require a hard fork, e.g. a chain split, but it can be softforked in the existing network.
Litecoin As of Now
Litecoin (LTC) is currently trading at $31.28 and it is the seventh largest cryptocurrency in terms of market capitalization.
The digital currency has had a rough 2018, as most of the others, as it lost more than 90 percent of its all-time high value in the beginning of January 2018.
In October last year, however, the team announced a forthcoming client release which will supposedly make the network cheaper and faster than Bitcoin Cash (BCH).
The release, which is called Litecoin Core 0.17, is supposedly going to reduce network fees by as much as 10x.
According to developers, lowering the fees is a good thing for Litecoin and it will supposedly improve its adoption.
What do you think of confidential transactions being enabled on Litecoin’s network? Don’t hesitate to let us know in the comments below!
Images courtesy of Shutterstock
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Turkish Lira and Borsa Istanbul Stock Have a Lot to Offer to Day Traders

Turkey is a significant emerging economy that combines the volatility and some predictability every news trader needs. Borska Istanbul had a month which once again showed the Turkish economy has a huge potential that is tapped by uncertainties about the political future, the geopolitical situation in the region, and rising inflation.
Things may go both north or south in Anatolia in 2019, which makes it a great market to watch and trade in the upcoming months. Get ready for some action with this short guide to Turkey by SimpleFX WebTrader – the easiest trading app that allows you to open the right order at the right time and profit whenever the markets go up or down.
Things to watch in Turkey
Turkey is in a unique geopolitical place between the European Union and unstable middle east. This exceptional location gives a unique opportunity for the Turkish government to negotiate trade and political deals, and the size of the 13th largest economy in the world, with over $900bn GDP, and the population of almost 90 million people, which gives President Recep Erdogan strong negotiation leverage.

USDTRY has stabilized recently, but just a few months ago Turkish lira plunged 25% in just a week, source: SimpleFX WebTrader.
Here are the most critical news threads that can affect both the Turkish lira and Turkish stock.
Recession or a “soft landing”?
The country may be facing a recession, which is a considerable growth swing since the first half of 2018 when it noted a GDP growth of over 7 percent.
There’s a lot of uncertainty about the 2019 outlook of the Turkish economy as it may be facing a recession. The Turkish Treasury and Finance Minister Berat Albayrak admitted that there would be a “significant slowdown” in the next months, but at the same time assured that it would not turn into a recession.

On a 5M EURTRY chart you can still see massive price movements, source: SimpleFX Webtrader
“There has to be some slowing down. This is soft landing strategy,” said Albayrak in a TV interview in Davos on January 24 during World Economic Forum in Davos. Albayrak assured that the government’s target of 2.3 percent GDP growth in 2019 is still going to be met.
Going into recession or not, the Turkish economy is at the crossroads, which creates an excellent opportunity to try different trading strategies on Forex against the largest currencies USDTRY and EURTRY.
Will the government influence the Central Bank?
Turkish ruling Justice and Development Party (AKP) – that is in power for the last 15 years – won the elections in June 2018 and is convincing the global economic leaders that now it focuses on three primary financial goals, which is: budget, discipline and fighting inflations.
This would help lira appreciate long term as inflation is one of the main challenges of inflation which reached a four-year high in October 2018 with 25 percent.
Traditionally Turkish President Recep Erdogan pushes the Central Bank to stimulate growth at the cost of inflation. The information that President Erdogan is not putting pressure on the central bank is enough for the markets to go bullish on Turkey.  On January 16 the Central Bank decided to hold the prime interest rate at 24%, which helped the lira in foreign exchange markets.
Watch the news about Turkish interest rates carefully. At the moment the currency has stabilized, but it may change at any time. In August 2018 lira plunged 25% in just a week.
Turkish politics bring more and more exciting news that may sway the exchange rate. The ruling AKP will have to face the challenge of municipal elections on March 31. The campaign may bring more decisions that may affect the lira.
Syria, Kurds, and President Trump
Media news creates additional interest in USDTRY pair. On January 14 the US president Donald Trump tweeted on that he will “devastate Turkey economically if they hit Kurds.”
The Kurds are the 4th largest ethnic groups in the Middle East (after Arabs, Persians, and Turks), but have no country of their own. Almost half of the over 20 million Kurdish population live in Turkey, and it is estimated they amount up to 20 percent of the Turkish population. President Erdogan considers Kurdish militias in Syria as terrorists.
You can imagine that such strong declarations and the extremely complicated geopolitical position of Turkey may affect the lira’s volatility.
Will Borsa Istanbul continue to rally?
The Turkish stock performed very poorly in 2018. This seemed to change in the first weeks of 2019, as the companies traded in Istanbul rallied with the strongest start in six years.

The impressive Turkcell rally in the first weeks of 2019 show the potential of Turkish stock, source: SimpleFX WebTrader
Borsa Istanbul’s main index rose 9 percent, and leading companies such as Turkcell Iletisim Hizmetleri AS gained almost 30 percent in the first three weeks of January. Turkiye Petrol Rafinerileri AS and Turkiye Garanti Bankasi AS also had a solid start.
This shows the potential Turkish economy has for the investors. The potential that is tapped by political uncertainties, which once again makes it a perfect field for day trading, as you can take long or short positions according to your interpretation of the news, and capitalize quickly on the right decisions since the Turkish financial environment is extremely volatile.
The outlook for Turkey
Turkey is an attractive emerging market. The potential is there. However, a lot depends on how the government will combine caring about the inflation and keeping the support momentum before the elections.
Trade tensions are easing, and there’s a chance that the situation in the region will finally start to stabilize. If this scenario occurs, the upside may be untapped. On the other hand, things always can get worse in the middle east.

You need a reliable trading tool you can use anytime and anywhere – SimpleFX WebTrader is designed for smartphones
The uncertainties surrounding Turkey create a unique situation where an individual trader can beat the institutional investors and come up with a winning trading strategy. It is very important not to take your eye off the ball. You need to follow the news closely and be ready to react accordingly at the right time.
That is why it is essential to have the best tool in your pocket. Have a SimpleFX trading account ready for action. SimpleFX WebTrader is the best mobile trading app. Within seconds you can buy or short USDTRY as well as any of the leading Turkish stock.
If you are new to CFD trading, give it a try with a fully functional demo account or a live account without minimum deposits.
The post Turkish Lira and Borsa Istanbul Stock Have a Lot to Offer to Day Traders appeared first on Live Bitcoin News.

Deducting Crypto Losses to Get a Tax Refund May Be Challenging, Accountant Says

The prolonged bear market of 2018 saw Bitcoin’s price decline with about 75 percent through the year. Chances are that a lot of people sold at a loss. However, this accountant thinks that filing for a tax refund may be a bit tricky.
2018 – A Rough Year
2018 saw the entire market cap of all cryptocurrencies shrink to about $120 billion from over $800 billion at the beginning of the year. A lot of altcoins experienced steep declines of more than 95 percent.
Bitcoin – the market’s forerunner, lost about 75 percent of its value in 2018. At the time of writing this, Bitcoin (BTC) is trading at $3,435.95, which is a far cry from the cryptocurrency’s ATH value of over $20,000 at the beginning of last year.
Naturally, this may have caused a lot of people to have sold their cryptocurrencies at a loss, hence leaving the opportunity to file for a tax refund open. However, one accountant holds that this might be easier said than done.
Bitcoin Tax Refund: A Challenging Endeavour
The IRS requires individuals to pay taxes on capital gains and, respectively, they can also deduct their losses on the tax form.
This reduces the amount that taxpayers owe and increases their overall eligibility for a tax refund.
However, according to accounting specialist Jake Benson, this might be a bit tricky. That’s because figuring out the so-called cost basis – the price of the asset at the moment of purchase – could be a bit challenging.
According to the accountant, the IRS doesn’t require cryptocurrency brokers to provide their clients with the traditional 1099-B form.
The burden is left upon the fund or the individual that’s trading to track cost basis, and this is extremely challenging. […] Some customers track their cost basis, some rely on proceeds, and it’s a really challenging scenario.
Last year, Live Bitcoin News reported that Fundstrat holds that US citizens old an estimated $25 billion in cryptocurrency. What is more interestingly, though, the agency also said that this new form of money actually represented 20% of the capital gains in the US throughout 2017.
What do you think of calculating tax refunds on cryptocurrency taxes? Don’t hesitate to let us know in the comments below!
The post Deducting Crypto Losses to Get a Tax Refund May Be Challenging, Accountant Says appeared first on Live Bitcoin News.

What WIll Happen When All Bitcoins Are Mined?

What WIll Happen When All Bitcoins Are Mined?
A peculiar trait Bitcoin possesses is that only a set amount of it will exist. That amount is 21 million bitcoins. At the moment of writing, over 17 million has been mined.
That’s a serious amount of Bitcoin to mine in the relatively short time span of around 10 years. As we draw nearer and nearer to Bitcoin’s limit, more and more people are wondering what comes next.
Bitcoin miners will be impacted the most by this event. Since there are no more Bitcoins to justify the effort of mining blocks, there will obviously be less incentive for them to keep doing their job.
There is a supposed solution to this quandary. There will be no new Bitcoins to reap, but transactions will still occur, and these need to be validated and recorded. Therefore it has been brought forward that transaction fees will be sufficient to satisfy miners, though the merit of this claim remains a topic of debate.
Another effect BItcoin’s depletion may have is that it could increase in worth. The scarcity principle (also known as scarcity value) ensures us that once the number of available bitcoins stops going up, their worth will go up in response, as people believe it to be more valuable.
While these predictions do hold water, it’s important to realize that, as close as we may seem to the finish line, we are unlikely to see the last Bitcoin mined within our lifetime. Since the reward for mining a block drops by 50% per 200,000 Bitcoin mined, the depletion rate has slowed down quite a bit. In fact, the final Bitcoin should be mined around 2140.
Furthermore, there’s the fact that mining a block becomes more difficult as fewer of them remain. At the end of December 2018, the difficulty stood at over 5 billion, and it only promises to become harder from there.
With that in mind, you can see there’s still plenty of Bitcoin left to go around. If you’re new to Bitcoin, some of this text might have not been as clear to you. If you’re interested in learning more about it and the blockchain technology that makes it tick, you are welcome to study the excellent infographic by Bitcoinfy below.
This graph lays out everything you need to know to be in the know about Bitcoin and blockchain. You’ll find information about their history, how they work, and much more.
What makes the graph truly shine, though, is that it presents all of this to you in an amazingly clear and concise fashion, visuals and all. Therefore, there’s no need to feel intimidated by trying to understand such an intricate topic. So give the guide a go, while there are still bitcoins to mine.
What WIll Happen When All Bitcoins Are Mined?

Bitcoin is the perfect Digital Currency to survive a Nuclear apocalypse

Nuclear apocalypse has been discussed since the 50’s. First by politicians and news outlets as fear mongering and war propaganda and later by Hollywood and the gaming industry as a seemingly endless well of money. Of course most of the discussion is centered around who and maybe what will survive. Charlie Shrem is a Crypto pioneer and he strongly believes that Bitcoin will have a leading role in a possible future devastated by nuclear war.
On January 22nd in a HackerNoon post, Shrem discussed why fiat would fail in such a dystopian future. Shrem takes note that in the event of a nuclear war, all banking organizations would be rendered useless. Contrary to the popular belief that only bankers, politicians and cockroaches will survive the nuclear winter, Shrem believes that the most notable survivor would be Bitcoin.
Bitcoin will survive the apocalypse
Most people tend to agree that in the event of a nuclear apocalypse, uncontaminated food and water would be priceless. Shrem points out that unlike physical assets, Bitcoin has absolutely no physical presence, it is decentralized and supposedly has no single point of failure. He states that:
“As long as there’s a single node running Bitcoin, the network will continue to function. It’s very likely that many nodes will survive even the worst of nuclear attacks. This is because they are scattered worldwide and they can communicate with each other via satellite internet connection”
According to Shrem, physical finance has physical limitations. He believes that decentralization makes it impervious to an economic calamity that would ensue from a nuclear war.
Of course you don’t need to be an expert in nuclear warfare and post-apocalyptic finance to take Shrem’s views with a grain of salt. After all, back in 2011 he founded the now-defunct Bitcoin exchange Bitinstant and went to jail in 2015. He was allegedly selling Bitcoin to people who would buy drugs on the legendary dark web market Silk Road.
A few months ago, Shrem was also sued by the Winklevoss twins. Cameron and Tyler claimed he stole 5000 Bitcoin from them way back in 2012. Shrem has publicly denied all accusations, but the lawsuit is stil ongoing.
So whether or not people believe Shrem is up to them. That doesn’t change the fact that Bitcoin and other Digital Currencies might indeed have a leading role in a potential post-apocalyptic financial structure.
Read more:

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Top 5 worst Initial Coin Offering of 2018
The Huobi Crypto Derivatives market reached more than $21 billion in trading volume
Russian Prime Minister, Dmitry Medvedev: We should pay more attention to Crypto

The post Bitcoin is the perfect Digital Currency to survive a Nuclear apocalypse appeared first on CoinStaker | Bitcoin News.

Apple Q1 Earnings Report Threw Cold Water On Market Estimates

Apple Q1 Earnings Report Threw Cold Water On Market Estimates
Coinspeaker continues reporting on ongoing earning calls of the world’s major tech companies. The stock market is waiting eagerly for Facebook’s stellar service growth while Microsoft amazes investors with excessively high dividend income. The next public company to expose its Q1 balance sheet is Apple.
Apple Lost a Key to Chinese Market
Probably out of the top-notch American companies whose performance is a key address of today’s stock market prognosis, Apple has mostly suffered from the U.S.-China trade stalemate. Being unwillingly engaged in the international conflict rolling out between those two counties, the company that in August has managed to reach the record high market capitalization of $1 trillion, today is cut off from the multi-billion Chinese market.
For Apple, the loss of direct access to such rapidly emerging and booming market as China was almost fatal. The more intense the trading war inflames, the less enthusiastic becomes Apple’s board of directors. Earlier this month the company has already lowered Q4 revenue projections from a previously stated range of $89 billion to $93 billion down to rough $84 billion.
In the meantime, the market indices have been turning red as Apple’s shares have lost 30% of their value compared to the company’s last earnings report made in November 2018. The company CEO Tim Cook cites global trade tensions and weaker-than-expected iPhone sales in China as contributing to the projected revenue shortfall.
Overestimated Products Price Results in Low Sells
However, not everyone agrees that the Chinese problem is a clue to the company’s downgraded performance. It is true that the Chinese market is the company’s third-largest source of revenue, but Cook has admitted that the upgrade cycle to new iPhones in some developed markets that were not affected by any particular trading restrictions has declined as well.
The tendency has a simple explanation — today, when the market is flooded with low-priced but powerful smartphones only true admires of Apple’s products are ready to overspend buying a new version of iPhone-labeled devices.
This might be a reason why a Q1 earnings report is about to lack usual segment metrics. The company announced that this time the report won’t show the figures for unit sales and revenue from the iPhone, iPad and Mac. That means investors won’t have the typical benchmark for growth they’ve come to rely on.
Instead, Apple will provide a pivot earnings report for its products segment, but it’ll take some back-of-the-envelope math to understand the patterns from previous quarters.
What The Earnings Say
The tech giant reported earnings per share of $4.18, and revenues of $84.31 billion for the quarter that ended Dec. 29. Analysts’ estimates were $4.17, and $83.97 billion, respectively. Apple’s flagship iPhone saw its revenue fall 15% from the prior year making $51.98 billion in sales, but analysts were looking for $52.67 billion. However, total revenue from all other products and services grew 19% to $10.9 billion.
Speaking on Apple’s revenue decline Cook said that while it was disappointing to miss its revenue guidance, he was confident about Apple’s outlook. He said the quarter’s results demonstrate that the “underlying strength of our business runs deep and wide.”
In the earnings release statement, he said:
“Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments. That’s a great testament to the satisfaction and loyalty of our customers, and it’s driving our Services business to new records thanks to our large and fast-growing ecosystem.”
In the midst of China’s breakdown, Apple is not so optimistic about the foreseeable future. It set Q2 2019 guidance in the range of between $55 billion and $59 billion that is lower than the street’s estimates. Nevertheless, despite the revenue and profit slips, Apple’s stock rose in after-market trading. Following the conference call, the stock was up 5.6% to $163.30.
Apple Q1 Earnings Report Threw Cold Water On Market Estimates