“I want to start investing,” Todd says to me.
Todd is a friend who runs a pool cleaning company. He’s at my house fixing the pump, and mentions he has come upon a large sum of money.
We talk about many options, including a Solo 401(k) and Roth IRA.
“What kind of returns can I expect?” he asks.
“Probably about 8% a year.”
Todd laughs.
“No, no, no. I need to make 100% a year. My son invests in that bitcoin stuff. Cryptos. He’s making all kinds of money. How do I do that?”
Perhaps you’ve had similar conversations.
The thing was, it was late 2022 when we were having this conversation. Bitcoin was up 600% for the year … hitting $60,000.
Every crypto expert seemed to be calling for bitcoin $100,000 and even bitcoin $1 million.
As far as I knew, they were right.
But this was definitely a “high-risk, high-reward” opportunity.
I tried to explain that to Todd. That if he were to invest in bitcoin, do a small amount of money. But I strongly encouraged him to get his foundation set. Start putting his money in the stock market. Not all at once, but over time.
However, I could tell his mind was already made up.
“You can’t fill a cup that’s already full,” my grandfather used to say. And that surely was the case with Todd.
He didn’t care about 8% returns.
He wanted the chance to make 100%. Fast.
Soon after our conversation, bitcoin crashed from a peak of $67,000 down to less than $20,000.
Todd hasn’t brought the topic up since, but something tells me he learned how not to invest.
Today, bitcoin is on a move again … climbing 100% this year, hitting $35,000 a coin.
And once again, experts are calling for bitcoin $250,000 within a few years. From a few months ago (sub $20,000), that would be a total gain of about 1,000%.
Others are once again calling for bitcoin $1 million.
Is it time to invest?
I don’t know…
Really brilliant men like Charlie Munger say cryptocurrency is “crazy, stupid gambling.” He remarks: “It’s ridiculous that anybody would buy this stuff. It’s like somebody is trading turds and you feel left out.”
(At 99, Munger is as snarky as ever.)
So, is bitcoin really a “turd” or is it the next great investment?
Sixty-three percent of you who took our poll last week said you do not currently own any bitcoin or any other cryptos.
But, based on the tons of letters we’ve gotten, many of you are considering an investment.
“Is this for real?”
“Is now the time to invest?”
“How much should I invest?”
Unfortunately, my team here at Banyan Hill and Money & Markets isn’t helping you decide what to do.
Some of our experts, like Ian King, love bitcoin. He has bought and sold crypto since 2013 and made a good amount of money with it.
Editor’s Note: Last year, as bitcoin bottomed out, Ian King released a presentation called “In it, he said we were at the bottom in bitcoin and urged people to invest. He called it almost to the day. Bitcoin bottomed out. Anyone who has followed Ian King’s crypto recommendations has made as much as 18,000% within a year … if you want to get his full take on the market, watch this presentation now.
Yet, other experts at Banyan, such as Charles Mizrahi, align a lot more with Munger. Charles has told me that he doesn’t understand crypto, and “if you invest in something you don’t understand, it’s not investing. It’s gambling.”
For him, there are safer and more rewarding investments in the stock market.
That makes sense to me.
But still…
There are really, really smart experts who call for bitcoin $250,000 and even $1 million.
What if the experts are right? And you missed out on the opportunity of a lifetime?
Yeah, that is FOMO (Fear of Missing Out).
But before you go and open a Coinbase account, and buy up some bitcoin, let’s see if we can understand the crypto market a bit better.
And then, I’ll tell you what I’m doing…
Crypto Is Still Tiny
The entire crypto market … bitcoin, Ethereum and all the other alternative coins combined … is really tiny.
At its peak, it was valued at $1.3 trillion. (Bitcoin makes up about half of that market cap.)
About 1/100th the size of the global stock market.
So, think about that.
If just 1% of assets move from stocks over to crypto, the entire crypto market size will double.
Is that likely?
I’ll tell you in a moment, but first, you need to understand that unlike most fiat currencies, coins like bitcoin have a limited supply … and that is a good thing for long-term growth.
Update: Last week, I wrote about how one can get a 5% guaranteed return on bonds, and why NOW is the time to invest in them to potentially get a 20% boost on the upside. You can read that article here.
It ended up being a great time to buy. Anyone who followed my recommendation locked in that 5% return, and the price of their bond went up (because interest rates eased a bit this week after the Fed talked on Wednesday). Many of you emailed me stating that you want to invest in bonds, but are not sure how or if you should. Thank you for those emails.
I cannot, however, give personal financial advice. My best recommendation is to speak to your financial planner if you have one. If you are interested in a tutorial, this YouTube video is very helpful. Thank you for your responses. I truly appreciate them.
Small Supply Getting Smaller
A bitcoin “halving event” is coming this April.
What it means is that the number of new coins coming into the market will fall by 50%.
This is the opposite of what happens with regular paper money (such as the dollar).
More and more paper money can be made every day, digitally, with no real checks and balances. Which is one of the main reasons why $1 buys a lot less than it used to.
In fact, dating back 100 years, the dollar has lost over 90% of its value.
It’s simple inflation.
Important Note: If you think things are bad here in the U.S., keep in mind the dollar is the “World Reserve Currency.” It is the strongest currency in the world.
- Argentina has a 72% inflation rate.
- Turkey has a 73% inflation rate.
- Zimbabwe has a 284% inflation rate.
You think citizens of these countries like inflation? Of course not. They want a currency that goes up in value, not down … bitcoin and other cryptos just may be the solution.
Bitcoin set out to do the exact opposite of these paper currencies.
Instead of printing more and more, the number of bitcoins being made is halved every few years. And eventually, it will cap at around 21 million coins (in about 100 years).
Fewer and fewer available bitcoins means the ones that already exist will be worth more.
This, by the way, is the fourth halving.
The first halving was November 28, 2012.
The second was July 9, 2016.
The third was May 11, 2020.
In each scenario, bitcoin rose around 1,000%.
But, if you want to capture the biggest gains, you’ll want to get in early. Investors start piling in months before the halving expecting that the price will jump, which in turn causes the price to jump.
However, to invest in bitcoin, you’d need to open an account on Coinbase or another platform.
And that is a problem for 83% of Americans.
Opening the Bitcoin Doors to 255 Million Americans
Only 17% of Americans have invested in cryptos.
And why is that?
Mostly because they have no desire to open a new account, which involves uploading your ID and connecting it to your bank account or credit card.
I get that this is an issue.
I first opened a crypto account in 2017. It was with Coinbase. I invested $5,000 and purchased bitcoin and Litecoin.
Litecoin shot up over 100% within a few days. I thought, great … let me see if I can sell this for a quick gain to see if this was for real.
But the platform, for whatever reason, didn’t allow me to sell. It literally denied me and locked my account.
There was no phone number to call.
And my emails were not getting answered.
I was furious.
I just put it to the side and moved on with life.
About a year later, I logged back in. Finally, I was able to sell my shares … for a loss!
With that said, Coinbase has come a long way.
I’ve found the platform very easy to use and can truly recommend it to anyone looking to invest in cryptocurrency today.
But, still, it is a hurdle.
It’s one more thing to keep track of.
Which is why BlackRock, one of Wall Street’s biggest firms, is launching its own bitcoin exchange-traded fund (ETF).
For the first time ever, you, me and 300 million other Americans will be able to invest in bitcoin through our regular brokerage accounts.
But isn’t there a bitcoin fund already?
Yes. Grayscale Bitcoin Trust (GBTC). It’s been around for over a year.
But, to buy GBTC, you have to be “accredited” … meaning you have to have $1 million or more outside of your personal home.
About 15% of Americans qualify.
In other words, 255 million Americans do not have access.
BlackRock is going to open the doors to everyone.
Anyone … no matter age, income or location … can invest in this bitcoin ETF. That will push the demand for bitcoin higher, and higher, and higher.
And now, roughly 30 other fund companies are angling to do the same.
You’ll have your pick of options to buy and sell crypto cheaply and easily using ETFs very soon.
Crypto experts say it’s not a matter of “if” bitcoin soars, it’s a matter of “when.”
So, Are 63% of You Making a Big Mistake?
Again, 63% of you said you do not own bitcoin or any other crypto.
But with supply dwindling (The fourth halving) and demand increasing (new ETFs and global demand), this seems like the right time to buy.
Especially since the entire crypto market is 1/100th the size of the stock market. If investors move just 1% of their net worth over to crypto, the entire market will double.
And certain coins could soar.
I do own some bitcoin through Coinbase.
But it is a small percentage of my net worth. Very small.
That’s because I see it as a Zone 2 opportunity. High risk, high reward. A very speculative investment.
Others may see it differently.
The returns will be binary. Either Munger is right, and it is a “turd,” or it becomes the next great investment.
If you are interested in investing in bitcoin through Coinbase, there are several YouTube videos that can help you get started. Just search “how to open a Coinbase account” and you will get several suggestions.
Or, wait for the BlackRock fund to open.
Investing In Bitcoin & Other Cryptos
If you currently invest in crypto, and want to take your investments to the next level, I strongly encourage you to check out Ian King’s service Next Wave Crypto Fortunes.
The last time we went through a halving like this, Ian King recommended Terra … a coin that went up 18,000% within a year (and yes, he sold it before the coin fell).
Guys like Douglas Habersmith invested $1,336 and walked away with $150,000 in profit on that trade.
And Jennifer Lee turned $500 into $42,300.
There are several more examples.
He has closed many other big gains as well. Here is a full list of some of his top gains over the last few years.
And his open positions are up, an average, over 100%.
Go here to look at his presentation now.
I truly hope this article helps you shape your opinions of bitcoin.
In the meantime, many of you are emailing us with concerns about the U.S. economy … will we enter a recession?
That makes sense.
A lot of really smart guys are warning that the U.S. economy is in dangerous territory. Jamie Dimon, the head of Goldman Sachs, for example, stating: “Now may be the most dangerous time the world has seen in decades.”
I’ll address this in next week’s issue.
Aaron James
CEO, Banyan Hill Publishing and Money & Markets
P.S. Ian King believes we’re in a NEW crypto bull market. As I mentioned above, the last time this happened — he showed his readers how to get peak gains of 400% … 1,000% … and even 18,000% … in just 12 months.
Now, Ian is releasing a new trade alert for his Next Wave Crypto Fortunes subscribers on Tuesday. For the details — and to see how you can get his latest buy recommendation — just click here.