Pretty much everyone has heard of Bitcoin, but very few understand much about it, and despite its price explosion over the past year, even fewer actually own any Bitcoin, or any other crypto currency (CC).
Bitcoin was the world’s first decentralized CC, and since the public got wind of it just a few years ago, interest has skyrocketed.
Back in July 2010, a single Bitcoin was worth $.08. A person who invested $100 would have been able to buy 1250 Bitcoins at that time. As more and more investors started to take interest in Bitcoin, the price went parabolic, reaching a high of just under $20,000 on December 18/17. Since that high we have had lots of news and rumours of governments trying to find ways to shut down CCs, with China and South Korea being the latest to threaten action, and as a result of the latest noise, the price action of Bitcoin has been very volatile, currently $8,949 today (April 23/18). Even with all this volatility, that $100 original investment in Bitcoins in July 2010 would be worth a massive $11.19 million today. Below is a chart of bitcoin over the last week.
You would have to have been on an abandoned island to not have noticed the mainstream media has become obsessed with all things “crypto.” But unfortunately, like most things the mainstream media covers, they really have no understanding of what they’re talking about. Just over a month ago these folks were trumpeting the record highs in bitcoin, forecasting outrageous price targets, but today, their headlines are proclaiming the “end of the crypto bubble.”
Bitcoin and the other cryptos that we are covering are on a wild roller coaster ride. When we first started to cover CCs and blockchain technology we warned our readers that this sector was the “wild west,” not a sector for the weak of heart. These digital assets are extremely volatile, so we have to expect severe volatility in price action, with swings both up and down, of 20%, 30%, and even 50% or more. When you get price appreciations in the thousands of percent, you must also expect dramatic corrections along the way.
Here is a brief background to Bitcoin and crypto currencies…
Bitcoin is digital money that is created and held electronically. At the core of bitcoin technology is a super database called the “blockchain.” The blockchain contains every transaction in the history of Bitcoin and is accessible to anyone.
While Bitcoin’s price is up massively since its inception, there have been many sharp declines along the way. To say it is volatile is a major understatement – it is the “wild west” out there right now. In its early days, governments tried to label Bitcoin as a currency used only by criminals and terrorists, and cringed as Bitcoin and other CCs gained in popularity. Generally, CCs are anonymous, private, and not susceptible to government or central bank interference or oversight.
As governments continue to rack up unsustainable debts, resulting in more and more fees and taxes, those with any wealth are looking for ways to protect that wealth, and CCs have emerged as another option, similar to gold, collectibles, and other tangible assets. But unlike most of those other assets, CCs are digital and can be accessed via the internet from anywhere in the world. As more and more retailers, restaurants, and other businesses accept CCs, they become much more attractive for those wanting to move their wealth to safer locations. For wealthy Russian, Chinese and others, CCs offer a new and very portable means of keeping private capital out of the grasp of government.
Today there are over 1,300 CCs, each building on the blockchain technology in different ways. Wall Street executives, venture capitalists, and now retail investors have all started to weigh in as Bitcoin and the other cryptos have taken over the financial headlines.
The recent price volatility in many cryptos is just the continuation of a tsunami of speculative trading. Last month was first day that Bitcoin futures could be traded on the CBOE Global Exchange, and on the CME Exchange. These are two key events that opened the door to greater inflows of institutional money, while also making it easier to bet on bitcoin’s decline. And Nasdaq and Cantor Fitzgerald & Co. will list Bitcoin futures within the first half of 2018. Shawn Matthews, chief executive of Cantor Fitzgerald & Co., stated that crypto currencies are a new asset class that “is not going away,” and that Bitcoin is here to stay. He stated:
“The asset class is not going away. If you look at the next level, it will be the institutions coming in and being larger participants in the marketplace, especially as liquidity gets better.”
John D’Agostino, a former Nymex executive, told WSJ that every department of every regulated exchange is considering listing Bitcoin futures, and that the number of Bitcoin futures exchanges will drastically increase throughout 2018, as leading exchanges and markets such as CBOE, CME, Nasdaq, and Cantor move to implement bitcoin. D’Agostino said:
“Every research department of every regulated exchange is saying, ‘Can we do this?. The majority of costs associated with that are marketing. If people want to trade this thing, why wouldn’t you?. This is a gift from the heavens.”
Is it too late to buy Bitcoin? The answer is no…but there are many more options than just bitcoin to generate potential significant profits in this dynamic market space. We believe that CCs like bitcoin are here to stay. But think back to the 1990s and the original internet bubble, while the internet has grown to become an integral part of our lives, most of the high-flying names of the 1990s are long gone. After the boom, we had the brutal 2000-2002 bear market that shook out the weaker players, making room for the stronger ones.
We expect that we will see the same this time around in crypto currencies, as that is generally how new technologies play out.
One thing is clear, the new CCs have brought with them a technology that will change the way the world does business, and if you want to be in position to profit from this generational change, you need to get involved. The first step is to get informed.
While there is a great deal of volatility in the crypto space, as an investor, you need to understand that the underlying blockchain technology is a disruptive technology that will impact a great many sectors. It is for this reason that our Crypto Trend service covers much more than just crypto currencies, it covers blockchain, AI, 5G, and many other new technologies that we believe will have a profound impact on how the world conducts business going forward, similar to how the internet re-shaped our lives. As highlighted in our February 3rd blog, there are currently over 36 industries that are heavily investing in blockchain technology today.
Remember, disruption doesn’t happen overnight. Blockchain technology is still in its infancy, and a lot of the actual technology has yet to be perfected. Blockchain technology will supplement traditional industries, making them more efficient. We are certain that blockchain will transform the banking industry.
As investors, we believe that as blockchain, AI, 5G, and other new disruptive technologies mature, solid long-term gains will be realized for those who are bold enough to be early participants. We have evaluated dozens of blockchain and new tech companies, and have a short-list that we are ready to pull the trigger on.
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