Bitcoin $50,000 Update and Tesla’s Stock Split
The crypto world is making a comeback in a big way.
Bitcoin, Ethereum and the tech behind crypto — blockchain — are all creating these large opportunities for America 2.0 investors.
We’re talking about disruptions unlike anything we’ve ever seen.
Smart contracts, banking finance, insurance, trading …
The room for this crypto disruption is like 99.9%!
And we’re only starting to see it happen. So, if you’re wondering if we’re still bullish about our bitcoin price target of $50,000 this year?
The answer is YES!
Paul and I are going to tell you what signals we’re seeing for the crypto rally in today’s IanCast.
And as for Tesla Inc. (Nasdaq: TSLA)?
We’re going to tell you about how it’s dominating the solar industry right now, the best solar exchange-traded fund (ETF) you can buy today and exactly what TSLA’s stock split means for you.
Watch it all here:
Small Alt Coins Show Signs of Crypto Rally
As we’ve been saying, there is a crazy movement in the smaller alt coins. We are starting to see that transition to Ethereum because a lot of the smaller coins are programmed on the Ethereum network. We’re seeing a lot of money flow into those.
Some of them are up hundreds of percent just in the past two months, which is a great sign because the last time there was a big crypto rally was April, May and June 2019. At that time, it was only Bitcoin and a couple other big ones that rallied. The small ones stayed still and made new lows after that rally was done.
But now we’re seeing these smaller ones up hundreds, even thousands of percent, in the past few months. That’s a good sign because when those smaller, riskier cryptos start to rally, that’s a sign that people are willing to take risks and are willing to put their money into more speculative and less certain crypto projects instead of just the big ones. Of course, Bitcoin and Ethereum are rallying too.
If you look at the moves in Chainlink, Compound, Atom and Algoran, these have been doubling over a couple days. There’s a lot of money pushing in to crypto.
Grayscale has been indicating that to us for over a year. Every one of their open calls for people to invest in their Bitcoin trust have been more than filled, I believe it’s been over allocated. Now they have opened one up for Litecoin and have existing ones for Ethereum Classic and Ethereum.
There’s a massive amount of money pushing into the crypto space and some of the signals seem to be fees. Right now, Ethereum fees are skyrocketing. They are the highest they’ve been in a long time. That’s because of the activity on the Ethereum network. That’s where most of these smaller cryptos exist and are programmed. The fees to use this blockchain are now really, really high.
There’s a self-fulfilling aspect to this. The fees are in Ethereum themselves. So, you have to either pay in Ethereum or go mine the Ethereum. There’s a ratcheting factor to crypto which is quite interesting.
The Halving process is also going to drive marginal miners out of business. Meaning people who were not making a lot of money were going to go out of business because the reward had halved for Bitcoin. That would drive a certain scarcity with fewer miners available to process transactions, fees would rise.
Those fees also have to be paid in Bitcoin. Then of course the longer you have to wait, the higher you are likely to bid the fee, which drives a higher demand for Bitcoin.
It drives the price higher because there’s demand for the cryptocurrency. There’s less supply now for Bitcoin. But with Ethereum, new projects on the network are emerging every day. It reminds me of 2017. As of now, there’s way more regulations so there’s not going to be as many scams.
There’s so much excitement and hype around these new tokens on the Ethereum network. It’s really bullish overall. Definitely the most bullish since that big 2017 rally.
The tokens and coins that are coming out now, as opposed to 2017, actually have a purpose I can understand. You can layer it onto something that is useful and that is going to have significant utility as it gets adopted and rolled out over time.
Crypto World is Expanding
The crypto world is now forming into three. There’s the store of value currencies which is Bitcoin, Bitcoin Cash, Litecoin — those are the big three.
And then there’s the platform currencies, which you can layer on additional projects, tokens, coins and currencies. Ethereum is the big one. Even for being as big as it is, it only has a $48 billion market cap in the standard way. People argue about the market cap and how many coins are actually out there. If the prices for Ethereum keep rocketing up, it’s obvious what will happen.
There’s going to be even more demand because people like to buy in at higher prices. Once people have already made money, they are more likely to buy even more because they are seeing that it’s a good investment.
Then there’s also going to be a point at which some number of people are going to look at alternatives. The next alternative is XRP, which is there and then that forms part of the other stack. There’s Ethereum, XRP, Lumen, Tezos, and Tron.
The world of defi coins is just exploding out. People are talking about custom building coins for specific purposes. There’s a good reason for these coins to be exploding in value. In theory, the worlds they would address — banking, finance, trade finance, insurance, aspects of smart contracts — are some of the biggest opportunity sets on the world.
Global banking industries is trillions of dollars. No one is really using the projects on a big scale yet. The room for disruption here is still 99.99%. Huge upside and they are starting to price in the beginning of that now, which is also very bullish.
Many people are skeptical, but our target price was initially $50,000. If you think about it, just in March Bitcoin crashed to $3,800 and it is nearly $12,000. It hit $12,000 and there’s clearly a seller at $12,000 who is willing to draw it back down. That’s a 3x move already.
Looking at the 2017 rally, if you took the same percentage gain from August through December and put it on this year, I think Bitcoin would be around $70,000 by the end of the year. So, it has happened before in the same amount time. If it’s happened before, it can happen again.
Cathie Wood from ARK Invest put out of a story talking about how MicroStrategy, which is a publicly traded company, is now buying Bitcoin as a store of value instead of cash. This is huge because it’s the first time we have seen a big company buy Bitcoin and actually have it as a holding in their company. They are not even a crypto company, they are just doing it to have an alternative to cash on their balance sheet, which is unprecedented.
Obviously, the miners hold Bitcoin after they mine it and it’s held as an asset on the balance sheet. However, for a regular company to begin holding it as a store of value is definitely a precedent setting. It now shows you one additional source of demand for Bitcoin.
Companies usually stash a bunch of cash on their balance sheet because it makes them look investable. It’s a smart move by them and a groundbreaking move for crypto. They are an almost $2 billion company. If a company of that size is doing it, you can bet other companies will follow.
Also, for some companies that can manage it, it’s an answer for if interest rates go negative in the United States. You would be willing to put your money into Bitcoin. All those store of value cryptos will start to get a serious bid from more forward-looking companies, individuals and family offices that say rather than leave money in the bank and get -2%, they are going to take their chances on crypto.
This will be a huge factor of demand if that does happen. Institutional buying is way up, which is going to be a big driver for a rally. Corporate demand, which no one expected at this point, is a great sign.
Tesla Split Gives More Buying Opportunity
Tesla is coming off the heels of the Apple stock split, which makes me think stock splits are going to be the new thing. A stock split doesn’t change the value of the company, it just changes the value of the shares. If you have one share of Tesla and it’s $1,500 and they split it five to one, then you have five shares that are worth $300 each.
What it does do is make the stock cheaper so more people can buy in. It’s more attractive at a higher price psychologically. It really can raise demand for the stock price. That has been a trend that has gone on forever with stock splits.
There are a lot of people who bought into Tesla quite early and it also makes it a little easier to sell. Now you no longer have to sell $1,800 worth of it, you can now sell $300 or $400 worth of it. It makes the stock a little more liquid even though in Robinhood and other apps there is fractional trading.
However, it does create liquidity on the institutional side in the sense that fractional trading does have to be aggregated. Each company’s shares are ultimately designated in shares. They do have to combine it together. It will make some of the trading in Tesla smoother.
That’s just more fuel for the fire for Tesla to make another big rally. The more shorts the better.
Investors Pricing for Future Markets
Tesla has led by pursuing a direction that was seen as an alternative and not that important. The Invesco Solar ETF, one of the ETFs in our STIXX acronym, has been rocketing up. Now people are really starting to price in the end of carbon fuel in terms of starting to see that it might be 25 years out, but the markets will move well ahead of that to price its in.
There are all these private companies that make electric vehicles, whether it be fully electric, hybrid or solar as a business. They are starting to come public. And it’s easy to see that there is demand for solar and alternative energy in general in the stock market.
Tesla is one of the biggest alternative energy companies in the world, if not the biggest. They have some of the biggest energy storage installments in the world — their electric vehicle business being the biggest. Now they are going to start doing solar roofs.
By the end of the year, they expect to have 1,000 installed per week. That’s big for their business. That’s going to be millions of dollars a month by the end of this year in revenue. And that’s only going to get bigger from here. They are hitting at three big components of alternative energy.
Tesla is a mix of new industry, which is not cars. There’s also the robotaxi element of Autopilot, which you will see roll out in one to three years. So, it’s a mobility, logistics business. Then the battery represents a variation of gas stations and refineries. Then there’s the solar business, which is like a utility. They are going to take market cap from all this. They have already started to suck dry the car market caps of the world.
It’s amazing how much they have been able to accomplish in the past couple of years. Now they are starting to build that big gigafactory in Texas where they are going to make the Cybertruck and the semi, which are going to be two big revenue boosters in the coming years.
The objection to Tesla always has been that they make 0.1% of the cars in the world. And the one thing most regular investors do is focus way too much on the existing quarter and then look backward. No one that is making an investment in Tesla is looking at today.
Everyone is looking a minimum of three to five years out. People who have that view and who have a lot of conviction on that view, those are the ones who made money in Amazon, Google, and Netflix. There was an incredible transformation unfolding and is continuing to unfold. Netflix is a great example.
I read this article talking about linear TV. Advertising has flattened out, largely driven by live sports. Now it has seen a collapse during the pandemic. With sports coming back, people have moved on. While there might be some recovery, essentially linear TV is going the way of retail.
I have YouTube TV, which I like. I just use it to save shows on there and watch them later. Of course, there’s Netflix, but with sports you are right, that’s what was keeping people watching. Now you have sports streaming. You have Sling and Draft Kings and these other companies that are working on doing that. There’s no point in having the old school linear TV anymore.
The reason for bringing this up is that market saw that three or four years earlier when all the objections that you were hearing about Tesla were also applied to Netflix. They don’t own their content, they only have XYZ percent of the market. However, the market was looking forward and could see that the end of linear TV was coming.
Cord cutting was accelerating, and various indicators were telling us that the world of content was going online. The market cap of all those content companies has gone to Netflix, maybe TikTok, YouTube.
Markets are forward looking. They look ahead and anticipate things. If they are right, those stocks rocket up. While we are talking about the stock market, let’s just cover what’s going on.
We’ve seen Apple continue to move up and take the Dow and S&P 500 with it. To some extent, the Nasdaq as well. A lot of that has been the big market cap companies that have a dominating influence over the big indices. Apple is the big one. They are now almost valued at $2 trillion. They are a big percentage of all three of those major indices. You also have Amazon and Google and Microsoft that are all near new highs.
Doing better than even those is still the smaller companies. The Russell 2000 is on fire. That’s a gauge for small and mid-cap companies. We are seeing so much demand for solar companies, cloud software companies. People are pricing in three to five years ahead of time because it’s clear there is a path for them to disrupt.
The disruptive companies are always going to trade at higher multiples than the disrupted companies because there is so much more potential for them to grow from here. It really does warrant that future growth priced in.
I want to fully acknowledge I have been wrong on Apple stock for many years. I have always loved Apple, but I have seen no real innovation in that company for more than four years. Certainly, there has been nothing since Steve Jobs died. It has been a company that is largely now — from my perspective and I know people disagree — driven almost exclusively by financial engineering.
Since they started doing stock buyback it in scale, it’s been a primary activity every week. I imagine Tim Cook and company sit down and decide how much they will spend each week. People think this is a small detail. However, if you are spending what I believe is in excess of $400 billion since 2014 or 2015, that’s a huge allocation of capital.
Also, they are spending time on what price they should buy. When stock prices are going up then that’s what becomes your focus every day. You don’t need to innovate, you can just buy back stock and bid the price up.
It’s something that can’t last forever. There won’t be any shares left. They are going to need to use that cash for something better at some point if they want to keep the high valuation they have right now. Putting cash to use by buying back shares for a company that’s supposed to be innovating new technology is not the best idea.
Contrast that to Tesla. Look at how many chances it is taking. Elon talks about wanting to make the Model 3 even cheaper. He knows not that many people can afford it and they need to make the price point even lower than it is. The Semi matters, the Cybertruck, the powerwall, the battery — all requires capital to grow. A lot of it and all up front.
This is why it took them so long to make a profit. You see headline after headline about Tesla not making a profit all these years. Now they are really profitable, and they are going to get more from here.
When I look at the price movements and knowing that some of the index movement is driven by Apple, no one should be surprised if stocks have ups and downs. When these big indices are bid up by four or five stocks, a big seller with a large amount of money can push an index down.
That’s going to cause volatility. We talk about all our stocks and our minimum timeframe is one to three years. Trying to capture every move in the market is futile. When you are looking at stocks this volatile you have to hold on through the dips. That’s just part of the game with high-growth, high-momentum stocks.
Positive Signs of Growth for Marijuana Market
We were recently asked why some of our stocks that are in our services are going up slower than much smaller, much less liquid stocks.
Number one, it’s not a bad sign at all. Number two, the reason these less liquid stocks can do this is because it doesn’t take as much money to push them up. So if you have $5 million in trading volume on an average day and a big buyer comes in and puts $2 million in one day, it’s going to affect that stock a lot more than one that has $30 million of trading volume every day.
The smaller ones right now are really doing very well and making all-time highs. That money is going to flow up into the bigger and more liquid stocks. Overall, it’s a very good sign for the marijuana market. There was one that reported earnings yesterday — Grow Generation — and it was up 42%.
It’s at all-times highs now or at least the highest it’s been in a long time. There are several more at all-time highs that are illiquid. That money is flowing into cannabis stocks and it’s only a matter of time before it hits those bigger ones.
The first signs of a bull market is exactly what you are seeing. The illiquid stocks and the smaller stocks get bid up first. That’s a sign that there’s money pushing in. As people see those stocks going up, it naturally makes people seek out additional stocks.
The bigger stocks naturally take the most amount of money to move. I would say that this is a good sign. It’s confirmation of what we’ve been saying which is that we think cannabis has bottomed out. With even any amount of institutional demand coming in, what we talked about with crypto can happen with cannabis too.
These are still small companies. In the big scheme of things, the marijuana industry is going to do nothing but grow from here. It’s going to take a lot of market share from other vice economies like alcohol and tobacco which are in the dwindling stages at this point.
There is so much room for these companies to continue disrupting and grow their valuations.
Deadline Tonight — 3 Million in 1 Week!
Yeah. I saw that coming.
Paul challenged us and the Strong Hands Nation to get this video to go viral. He wanted 1 million views in one week….
And we hit 2 million in just a few days.
I’m not surprised. This three-minute video is the funniest thing I’ve seen on the internet in months! And you all are awesome.
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Happy Friday everyone!
Editor, Rebound Profit Trader
Editor’s Note: Check out tomorrow’s Bold Profits Daily to see if we hit our 3 million goal! We’re going to be watching the views tick up all the way to midnight tonight! And we’ll let you know how our Strong Hands Nation comes through tomorrow!
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