I’ve only owned Bitcoin for about two months, but I’m sold on its future. I feel like I would be shirking my duty if I didn’t share what I’ve learned and encourage you to buy some too.
I believe that Bitcoin and other crypto-currencies are about to arrive in a big way. And that a small grubstake now will turn into a large payday within the next 18–24 months.
The Halvening Has Happened
You may have heard of an event in Bitcoin world that’s been talked about a lot in the news lately.
“The halvening” just occurred on May 12. An event that occurs once every four years, and refers to reducing by half the amount of Bitcoin paid to the miners that solve complex blockchain problems.
[Technical mumbo jumbo.]
What’s important to know about the halvening is that it reduces the supply of new Bitcoin coming into circulation and creates a true and predictable scarcity in the currency. It’s why bitcoin afficionados believe it will lead to a dramatic price increase relative to the dollar, and provide a stable store of value outside the world monetary system.
The Smart Money Is Buying
One way to make money as a small fish investor is to copy the whales.
Hedgefund managers and venture capitalists.
- Renaissance technologies $75 billion hedge fund recently told the SEC that it was dipping its toes in the Bitcoin waters.
- Paul Tudor Jones, considered one of the best hedge fund managers ever, announced two days ago that he was allocating between 1–2 % of his $8 billion hedge fund into Bitcoin.
- Marc Andreeson, Netscape founder and partner in a major Silicon Valley venture capital firm, has been bullish on Bitcoin since 2014. But he’s recently going big with a new $450 million fund dedicated to cryptocurrency investments.
The World Is Buying
- The Swiss Stock Exchange has been building a crypto-asset platform, and now offers trading of 12 cryptocurrencies.
- Germany recently rewrote its laws to allow German banks to offer crypto products and establish cryptocurrency firms as financial institutions.
- Dutch giant ING announced it will allow customers to store crypto assets.
- Mega bank JP Morgan has opened its services to cryptocurrency exchanges.
- India’s supreme court overturned a central bank ban on cryptocurrencies, paving the way for a resurgence of cryptocurrency trading.
- South Korea recently recently passed comprehensive legislation for the legalization and regulation of cryptocurrencies.
- China has rolled out it’s own cryptocurrency — the digital yuan.
The Fed Is Acting Like a Drunken Sailor
To be fair, it’s not just the U.S.
In response to the global Covid-19 pandemic, governments around the world have embarked on a money-printing odyssey the likes of which no one has ever seen before.
You have to ask yourself: what is money really worth if you can just print an endless supply of it?
The only way the Fed can get out of this $19 trillion (and counting) hole it has dug for itself is through inflation. You can be sure that in addition to propping up the stock and bond markets, and distributing cash like confetti to all and sundry, that it will pull out all the stops to generate inflation.
That probably won’t happen for at least a year or more, but when inflation does hit, watch out. This is where asset classes like gold and bitcoin will really shine.
Remember, because of the halvening and the finite supply of bitcoin that can ever exist, it is inherently deflationary. It may well be the perfect off-ramp for your dollars when inflation hits in a big way.
Don’t Delay. Get Some Bitcoin ASAP.
But before you do, you should know that it is very volatile.
Several months after the last halvening in 2016, Bitcoin shot up from under $1,000 to nearly $20,000 per coin, before suddenly collapsing. Since 2018 it has seesawed between $3,000 and $12,000.
Currently Bitcoin is trading right around $9,000 per coin.
A good rule of thumb is to invest only as much as you can afford to lose. Not more than 2–5 percent of your investible assets. (Please don’t throw your kids’ college education, or take out a second mortgage on your house to buy Bitcoin!)
In the coming months, massive amounts of money will start flowing into Bitcoin and cryptocurrency. Nobody can know how high it will go of course, but many people are forecasting a dramatic increase in the value in the next 5 years.
Some predictions seem outlandish — up to $1 million. That’s why even a $500 investment today could really move the needle on your net worth.
My next post will provide more detail on how to buy and safely store Bitcoin and other crypto currencies, but in the meantime, you can check out some of the larger and more reputable crypto exchanges like Coinbase, Gemini, or Binance.
Do it now!