Tuesday, 21st May 2019
Bitcoin – back on the boil….
If Bitcoin were a horse, it looked like one headed for the knackers-yard throughout 2018….
A stellar 2017 had seen the number one crypto ‘go vertical’ and climb in value from less than $1000 to more than $20,000 at its intra-day peak….
Then the bells rang-in 2018 and across the next 12-months 80% of those gains evaporated….
Plenty of fingers got burnt to a crisp. Some fortunes had already been made, but many others had been swiftly lost….
- Missing in action – the bandwagon jockeys….
Lost too were all the foam-at-the-mouth pundits, the celebrity cheerleaders, the freshly minted crypto ‘experts’ and many who had been daring to think of themselves as the new super-rich….
One minute they were shouting and bawling like inebriated monkeys from the back of the bandwagon as it careered along – powered by the rich and heady fuel of hype and speculation….
The next minute they were gone….
As Bitcoin’s fortunes dipped and then went into freefall, this band of crypto zealots slunk off quietly into the shadows….
It was as though the messiah they had been advocating at the top of their lungs had been exposed as a semi-retired plumber from Pontefract….
Little or nothing more was heard from them….
But recent events will have served to stir their juices anew. The time for purdah may be over. Bitcoin is showing signs of coming back to the boil….
- Bullish sentiments….
Bitcoin hit $8323.99 last week and is trading at its highest levels since July last year….
The crypto is up 130%+ over the last 3-months….
Having looked like a corpse awaiting burial in 2018, Bitcoin might be doing a Lazarus. There might be a future after all….
The recent price action – like strong drink to some – has encouraged some of the biggest and loudest bulls back into the pasture….
John McAfee, for instance. He put his manhood on the line in 2017 – saying Bitcoin would be at $250,000 by the end of 2020…
It had looked like a bad bet. But his bullishness remains undimmed. He’s been out and about upping the ante and saying that it is ‘mathematically impossible’ that one Bitcoin will be worth less than $1 million ‘by the end of 2020’….
Move fast appears to be McAfee’s advice….
He’s not alone. Wences Casares, a director at Paypal, is more conservative. But he too sees a bright future for Bitcoin. He thinks there’s a 50% chance that one Bitcoin will be worth $1 million in 7- to 10-years….
Venture capital investor Tim Draper is another Bitcoin believer – one with a vision that extends beyond simply banking profits in a rising market….
‘I’m a believer that in four years, something like that, Bitcoin will be about a 5% market share of the earth…. I eventually want to have a fund where I take in Bitcoin and I fund everybody in Bitcoin, and they pay their employees and suppliers in Bitcoin. And then I pay my investors in Bitcoin. Because I would then require no accounting, no legal, no book-keeping, no custody. It would all be done.’
- Keeping it positive….
The detractors are out on maneuvers too – dismissing Bitcoin as ‘fools’ gold’, ‘a giant Ponzi scheme’ and a ‘very risky asset’….
Others are putting the recent price action down to Donald Trump’s trade war with China – making the case that American and Chinese investors are only getting into Bitcoin (and stimulating the price as a result) as part of some giant game of geographic price arbitrage….
Others still are out to warn investors that this time won’t be like last time….
Weiss Ratings – the crypto-ranking firm – say that every bull market tends to be smaller than the previous one….
UBS reckon it could be 22-years before Bitcoin recovers its peak levels – with their conclusions based on how other assets have behaved post-bubble-burst in the past….
But hellfire, Bitcoin has been down for so long, we just want to help it to its feet and do what we can to send it on its way….
For today at least, we will join in with the general spirit of optimism and positivity. And we will ask this question: are there reasons to be cheerful about Bitcoin’s prospects moving forward?
- Reasons to be cheerful….
The folk who study the background numbers that matter will tell you that there has never been reason to be anything other than cheerful about Bitcoin….
Every day, Bitcoin users send between $400- and $800-million worth of Bitcoin across the network. That’s less than 50% of the daily action Paypal generates but it represents more activity than the network handled before the price spiked in 2017. In other words, usage has increased despite the Bitcoin price-plummet last year….
And the figures related to the use of blockchain wallets would further support that view. Statista report that user numbers have risen 900%+ since the beginning of 2015. In other words, there is a fast-growing pool of new cryptocurrency adopters….
And the numbers are set to keep on growing as younger people drive increased activity in the crypto sphere….
A study conducted by Adamant Capital found that 59% of the 18-34 age group have a positive view on Bitcoin as a financial innovation and 48% think most people will be using bitcoin in 10 years.
That compares to 24% and 16% among the 65+ age group. Resistance is slowly dying out. There is a brave new world coming up behind. Much of it still to be born.
And it’s not just the kids and tomorrow’s money. The sober-suited money managers that manage today’s capital want to be in on the game too – in increasing numbers….
‘Fools’ gold’ or not, institutional investors are taking an interest and staking out positions….
A survey conducted by Fidelity Investments – which took in 400+ pension funds, family offices, hedge funds, financial advisors, and foundations – reports that 22% have current exposure to digital assets and 40% are open to making crypto investments over the next 5 years….
- What I think….
Bitcoin and other frontline cryptocurrencies might have had a poor 2018 but they haven’t disappeared.
The user pool is growing and set to continue growing into the future….
And the professional money-managers are getting involved – albeit cautiously….
Right now, Bitcoin is the crypto with most to gain from the demographic and capital-allocation trends….
I don’t offer investment advice. I am not permitted to do so. And very few would want to take my advice anyway. But I will say this….
If you’re thinking about buying into Bitcoin, my advice is to do so purely on a long-term basis. This thing could take years to get where it is going. And it is the long-term speculators who get onboard early doors (back in 2010 ideally) who will reap the greatest rewards….
But don’t throw caution to the wind. Bet only what you can comfortably afford to lose. Play to small stakes. That way you are positioned for maximum upside with limited downside….
And don’t obsess about daily price movements. Buy, forget, hold long-term. That’s my advice if you’re going in….
That’s the truth of it as we see it….
All the best,