UK Budget 2024: Bitcoin investors hit by CGT increase | Bitcoin News by CoinCorner

Transcript

The UK government has released its Autumn Budget, bringing into effect an increase in capital gains tax. The second-ever statue paying tribute to Bitcoin's anonymous creator, Satoshi Nakamoto, has been revealed in Lugano, Switzerland, and Microsoft is considering adding Bitcoin to its balance sheet, putting the decision to a shareholder vote.

Looking first at the price, I think it’s safe to say we’re back! It’s been a great week so far as Bitcoin has risen by 10% to previous all-time highs of $73,000 per coin. But now the question is: will it get rejected at this level, or could it break through and head straight into price discovery mode? One thing is for certain—as we draw to the end of October, it seems that “Uptober” is a real phenomenon.

Some news potentially contributing to the positive price action is coming from Microsoft, whose shareholders are set to vote on a proposal to add Bitcoin to the company’s balance sheet. In a filing on 24th October, Microsoft disclosed that the assessment of investing in Bitcoin has been proposed to certain shareholders, who will vote in a meeting on 10th December.

This could allow Microsoft to follow in MicroStrategy’s footsteps, whose Bitcoin investment strategy has enabled the company to outperform Microsoft by over 300% this year, despite doing a fraction of the business. This was also backed by the conservative think tank group NCPP, which stated that at minimum, companies should evaluate the benefits of holding some Bitcoin—even just 1% of their assets. Following this, MicroStrategy’s founder, Michael Saylor, reached out publicly to Microsoft’s CEO, Satya Nadella, on X. Saylor suggested Nadella get in touch with him if they’re interested in “making the next trillion dollars for their shareholders.”

Positive as this seems for widespread corporate adoption of Bitcoin, Microsoft’s board has already recommended voting against the proposal. They argue that the management team has already carefully considered the topic and deemed it unnecessary, citing Bitcoin’s volatility as unsuitable for their corporate treasury.

Now, speaking of MicroStrategy: over the past five years, they have outperformed every company in the S&P 500 index. Saylor has now claimed MicroStrategy’s place among the “Magnificent Seven,” creating what he’s calling “The Magnificent Eight” after achieving enormous daily trading volume. He posted on X that MicroStrategy has now also beaten Microsoft’s overall stock performance when looking back as far as 1999.

When comparing the companies’ performance over this period, Microsoft has achieved an impressive 1,467% growth, but MicroStrategy has now blasted past this with a huge 1,570% growth. This is truly astonishing, considering the contrast in brand recognition, as Microsoft is a household name. It emphasises just how impressive MicroStrategy’s Bitcoin strategy has been, as most of this performance has come after they made the bold move four years ago.

MicroStrategy currently has a $50 billion market cap with a global ranking of 396. This week, at their earnings call event, they announced plans to raise $42 billion to buy more Bitcoin over the next three years. Considering they already hold 252,000 Bitcoin—valued at $8 billion and representing 1.2% of the total Bitcoin supply that will ever exist—it seems nothing can slow them down at this point. The genius of their strategy is that it’s advantageous for other companies to follow MicroStrategy’s example, which is why they are so open about their future plans to acquire even more Bitcoin.

Also in the news, the Bitcoin-friendly city of Lugano, Switzerland, this week unveiled a new disappearing statue honouring Bitcoin’s creator, Satoshi Nakamoto. The installation shows an elusive figure working at a laptop, which becomes almost completely invisible when viewed from the front. The genius design represents Satoshi’s anonymity while also capturing the idea that “we are all Satoshi.” When you stand behind the statue, you become visible within Satoshi’s outline, symbolising that anyone can be Satoshi. Love or hate the design, it’s great to see another statue paying homage to Satoshi, following Budapest’s unveiling of the first such statue back in 2021.

Another place looking to embrace Bitcoin in a big way is the state of Florida. This week, Florida’s Chief Financial Officer formally requested that Bitcoin be included in state pension funds. In a letter to the executive director of Florida’s State Board of Administration, CFO Jimmy Patronis outlined the rationale behind Bitcoin’s inclusion in the state’s portfolio. He noted Florida’s consistent AAA bond rating, record state reserves, and an economy that would rank as the 16th largest globally if it were a country. Patronis argued that these factors put Florida in a great position to consider new investment strategies, with Bitcoin being an excellent tool to buffer the volatility often seen in traditional asset classes.

The proposal would follow the examples of Wisconsin and Michigan, both of which recently gained exposure to Bitcoin in their pension funds. Michigan currently holds around $164 million worth of Bitcoin ETFs. Patronis also suggested that this allocation aligns with Florida Governor Ron DeSantis’s move to reinforce the state’s crypto-friendly stance, which includes enacting legislation against central bank digital currencies.

Now for our final story: although it’s been a bullish week for Bitcoin holders, with prices appreciating, UK investors may face increased tax bills. This week, in Labour’s Autumn Budget, British Finance Minister Rachel Reeves announced an increase in capital gains tax, aiming to raise an additional £2.5 billion in tax revenue.

The capital gains tax rate will now increase from 10% to 18% for basic rate taxpayers, and from 20% to 24% for higher rate taxpayers. Unfortunate as this is for investors, the change is less severe than some analysts anticipated—especially when compared to Italy, which recently raised its tax on Bitcoin from 26% to 42%. In the UK, despite this tax rise, the government has maintained the annual capital gains tax allowance of £3,000, meaning you’ll only be taxed on profits exceeding this amount when selling investments such as stocks or Bitcoin.