OMG Crypto Market! What’s Next…
It was a market-clearing event in crypto.
More than $1 trillion wiped clean from the market.
It was crazy.
Is Tesla’s Elon Musk responsible? No.
But before you give in to all the FUD (fear, uncertainty and doubt), check out why we think it was actually a positive move.
And why you could see bigger gains ahead in bitcoin and other cryptos.
What is Happening in the Crypto Market?
Paul: To the moon, Ian. Today’s agenda was set before we even decided to do the IanCast. It’s going to be about Bitcoin (BTC), crypto and then the stock market. Let’s start with what we know everyone wants to know about. Oh my god, what is going on in the crypto market?!
The world seemed like it was going to end yesterday. We were texting as it was starting to unfold. You had that feeling this was kind of due in a way. You go first on what you think precipitated it, what occurred and where you think this is going.
Ian: That was complete insanity. This isn’t out of the question in crypto. It can happen at any time. I was watching while this happened. BTC dropped from $40,000 to $30,000 in 20 minutes. It wiped out $1 trillion from the market — which is crazy — in a few hours.
A lot of people were panicking. I was checking Twitter. A lot of people were confused or caught off guard. Overall, I think this was a healthy thing. I think we are going to see a lot of gains from here. I think it was a market-clearing event, which we hadn’t had for a long time.
The last big one was last March when all the lockdowns started. Obviously a lot of markets sold off. This time it was a little bit more concerning for some people because there wasn’t a set event that triggered it. One of the things I look for for general sentiment is the futures market for BTC.
That is where traders can bet on the future price of BTC, but they can do so in ways that aren’t available in the stock market or other markets. That’s because this kind of trading is done by institutions. But in crypto, anybody can do it. Anybody can go and make an account on Binance and buy BTC futures with 100 times leverage.
That means that you are buying $100 worth of BTC for $1. You basically get 100 times the price move of BTC. That means if BTC goes down 1% after you buy it, you get totally wiped out. When sentiment gets too crazy and people get too excited, a lot of people do that and a lot of people get wiped out.
BTC’s 800,000 Trader Liquidation
That can have a big effect on the market. That drop on Wednesday wiped out more than one-third of BTC futures. That got rid of the chaos and people trying to make a quick buck in the crypto market. I saw a stat that 800,000 traders were liquidated during that drop.
That’s one aspect of this. Another one was stuff we were seeing with coins like Dogecoin and Shiba Inu and other things that were going up thousands of percent that don’t have a use case. They are fun, they are memes, but I think it’s a sign that the market is getting too euphoric.
Those traders got wiped out as well. Overall, I think it clears the road where people who are willing to endure the volatility are buying in. Those are the people who buy and hold forever. It adds another layer of support to the legitimate good parts of the market.
Overall, I think it’s very bullish. We’re going to go up from here — to the moon.
Paul: I want to read folks a tweet that you put out yesterday. It said,
“This was as close to peak fear as I’ve seen in crypto. BTC, Ethereum, Uniswap, Chainlink and other high-quality cryptos are still just as high quality. The only thing that changed was the price. I believe this is going to be seen as a great buying opportunity.”
Where do you think we’re going? I know what people are going to ask: When is it going to happen? In response to your tweet, I wrote,
“I 100% agree. This FUD will pass then GER — Greed, Envy, Regret — at the new highs that will come”
Where do you think we’re going and when does the recovery start? When new highs, as they say.
Ian: Yea, when moon [laughing]. I think sooner rather than later. My prediction for $115,000 by August is still valid and intact. I still think that is very possible. The reason for that is because the last chaotic drop happened back in March when BTC was already in a bear market.
There wasn’t much sentiment around it. There weren’t that many buyers or believers that it would make new highs soon. It still went back to $10,000 in a month or so. That’s a 3X move off the bottom. From this it would be $90,000. We’re still in a bull market. You can see it’s not only BTC going back up but pretty much the whole market is rebounding.
BTC led the charge back up, which I think is necessary because BTC still has a lot of influence over the crypto market. It was important that BTC rebounded. I think it shows people are still bullish and people are looking for dips to buy.
Considering last March it had a 3X move within a month or two, I think it’s even more probable this time. I think we’re going to see new highs sooner than people think.
Paul: I was thinking that at the March bottom last year we hit a low of $3,200, $3,500 or $3,800, depending on which exchange you look. This low was about 10 times that. We never even got anywhere close to that low. We never got anywhere near close to even $20,000.
I had a friend while this was going on tell me, “I think we can see $15,000 or $18,000.” That seems really unlikely. I believe the gusher of buying that would have come as BTC approached anything near that would have been extraordinary.
Ian: That would have been. Even a drop to $30,000 was much bigger than I thought was going to happen. You never quite know. I would have been surprised if it went below to former all-time low. Obviously there’s going to be a lot of new buyers in these.
I don’t think it will go anywhere near $30,000 again. It might go down a little bit — who knows — but I don’t think it will ever go down below that.
BTC and ETH Will Rebound Higher
Paul: I’m going to put myself on a limb and say I don’t think it will see $30,000 again. I have stepped into all of this and put out a tweet saying,
“$BTC and $ETH crashed this morning, though nothing’s changed. Both still setting up to rocket higher this year in my opinion. I still stand by $BTC $250,000. Setting a new $ETH target of $20,000. Both in 12 months.”
In other words, another 12 months from here is the time period I am setting up for. I was promptly asked why that was. RF asked what changed my forecast. I said it was one to three years before. My previous ETH forecast was $4,000, we have surpassed that.
I said that with this washout, the deck is clear. All the fast, easy money players — the folks you are talking about who just want to get a pop — are washed out. They are weak hands. The coins sit with what we call strong hands, people who are in it for big gains over a period of time.
They won’t sell for small gains. That creates what I refer to as a hard market. It’s hard to get the coins out of the folks who own it because they have endured through the volatility. This where big gains come sooner. What do you think of that?
Ian: I fully agree. That’s what happened during the bear market in crypto. A lot of the coins that were doing well in 2017 got wiped out. I’m not saying we are in another bear market. This is what happens whenever there is a big drop in anything, people cling to the leaders.
That is what shows you what is leading and what is not as great. I agree that these are the strong coins, the ones that have adoption. Just like the four I mentioned in the tweet.
Paul: Just so you understand what our view of leaders are, from our perspective, coins that have an actual use and utility are seeing significant adoption. They are actually being used and have a use case. In other words, you can actually see various things in the cryptoconomy or the tangible economy where these coins are going to be used.
They have value. They have a purpose. You can see there will be long-term demand for these. Things like Doge, we have no issue. Meme coins have a purpose. They show the power of demand and supply. They can rise purely as a function of people’s desire to see them rise.
Some of those people can be very influential like Elon Musk and Snoop and others. You can see the power of influence in that.
Ian: Some people like to get mad at the whole Doge thing. I think it’s funny personally. If you make money with Dogecoin that’s awesome, I am happy for you. I haven’t bought any. I kinda wish I did though, to be honest.
Paul: I think the same thing. On the one hand I do feel a little stupid for not having thrown just a few dollars into Doge. It was so there and it was so obvious.
Ian: Yeah, but you never know. Maybe it will drop and then we can buy some.
Paul: Usually those regret buys are the worst. You get on a big down swing and then it never recovers. In my experience, those regret buys are terrible.
Someone else who was interviewed a great deal during this crash is our friend Cathie Wood. Cathie very bravely went out there and said she still expected BTC to rise to $500,000 in interviews she gave. What do you make of that?
Ian: I think it’s completely possible considering what it has done in the past. The 2017 rally went from the prior all-time high of $1,000 all the way up to $20,000. A 20X increase between all-time highs would put it at $400,000 this time around. The 2017 was rally was totally retail.
There weren’t any billionaires, institutions or hedge funds buying in. I still think there’s definitely the argument to be made that is going to create a bigger rally this time. I don’t’ think we’re anywhere near the end yet. Yeah, $500,000 is bold, but so was $4,000 Tesla pre split and that ended up happening.
I wouldn’t shrug off what Cathie Wood says, personally.
Paul: I was ridiculed and pilloried personally when I put out a target of $50,000. It seems like so long ago. When we put it in Profits Unlimited it was around $10,000 I think. I would have to look it up. I was pilloried because it seems so unthinkable at that moment.
Ian: People even last year were not too bullish on BTC. Just this time last year we were recovering from that drop to $3,000. It can do a lot in a short period of time. It’s only been five months since it broke all-time highs. It’s been a crazy five months. Who knows what the next five months have to bring. I think it will be very bullish.
Paul: Before we get too far into this IanCast I want to mention our three disclosures, disclaimers and warnings. First, this YouTube channel is not financial advice. We are not licensed financial advisors. Anything you are seeing here is for information purposes, engagement, financial entertainment — whatever you want to call it.
We also do this because we focus on what we call America 2.0, Fourth Industrial Revolution stocks and investments.
That includes BTC and cryptocurrencies. The second thing we want to mention is that if you choose to follow any of the ideas we talk about they are long term in nature. They are a minimum of one to three years. If you put on some day trade or something like that and you lose money, anything we are looking at we are looking out one to three years minimum.
DeFi Projects Maker and Curve
You were talking about coins at Maker and Curve and others. There’s hundreds of millions of dollars backing these coins now.
Ian: Right. A lot of these DeFi projects are very established. These are all programmed on Ethereum. Ethereum is what I compare to Android or iOS. It’s a platform where you can put apps. A lot of these apps are financial. Ethereum has only been around for five years.
These projects have only been around a few years and they are already influential. They have billions of dollars of people’s money in them. The two you mentioned are at the core of DeFi. Maker is a protocol that mints a coin called Dai, which is tied to the dollar.
IT’s a stable coin, which I briefly mentioned before in these videos. Stable coins are important because they created a bridge between the traditional fiat system and the cryptoconomy. There’s a lot of demand for stable coins. So Maker is a very important project.
Curve is also associated with stable coins. They supply liquidity of stable coins to other DeFi coins where you can trade them on Uniswap or borrow or lend on Aave. These are at the center. I would consider stable coins the glue that holds DeFi together.
It allows people to have some sense of normalcy within this very new economy. Those are two very important projects to know about and keep up with as well.
Paul: You defined Maker and a little bit of Curve, give folks what Uniswap and Chainlink are as well.
Ian: Uniswap is an exchange where you can trade all kinds of cryptos. It’s totally decentralized. For example, when the whole GameStop thing happened and the exchanges said you couldn’t buy or sell GameStop, that doesn’t happen in DeFi. There’s no hierarchy. There’s no authority at all.
Things can get crazy, but it’s a very good project. I would recommend giving it a shot. You can get a bunch of different coins there that you can’t get on centralized exchanges like Coinbase or Binance. It’s interesting. It’s actually generating almost as much trading volume as centralized exchanges.
It’s getting a lot of adoption, which is surprising because this is also very new. Chainlink is a service that provides real-time data from the real world to the crypto world. This is another bridge that I think is important for DeFi. For example, on Uniswap you can see the prices of certain coins because Chainlink delivers that information to Uniswap.
Paul: I think Uniswap over time will do more volume than the Nasdaq and New York Stock Exchange combined. It’s just a matter of time given the number of coins that trade on there. This is a good moment to update folks on our crypto trading service.
We know it’s taking forever. Just understand there have been a lot of issues with our ownership of crypto. Our publisher does not allow us to own things we recommend. We have had to work that out.
Having said this, I have seen some dates from our publisher suggesting that the potential launch date is somewhere at the end of June.
Ian: It’s great. We are definitely making progress on it. We are excited to have it out to everybody. The tentative — and I want to emphasize tentative — is this summer.
Paul: We are super stoked and excited to have this. Ian and I have dreamed of having a crypto service at our publisher because we have been engaged with crypto for a long time.
Elon’s BTC Tweet and China’s BTC Ban
Moving on…there was the Tesla tweet that we discussed last week about Elon not taking BTC at Tesla and claiming BTC was bad for the environment.
Ian: I think, as we say, the news follows the price and not vice versa. The price did fall a little after Elon tweeted that, but he has tweeted other things that have created short-term noise in Tesla stock, BTC or Doge. It doesn’t correlate to a long-term or mid-term price move.
There was still a lot of froth in some areas of the crypto market, not necessarily BTC or ETH, but in other areas that needed to be cleared out. When that happens it can create a lot of fear in the market overall. I think the fact we saw BTC rebound so fast before and lead the charge back up is a good sign.
As for the China thing, it seems like once a year there is news that China banned BTC. I don’t think anybody is surprised at all by this anymore. I think this time it was that they don’t let financial companies have crypto services or something like that. I don’t think that has an effect on BTC in general.
Paul: It was just a reiteration that the official banks are not supposed to be servicing crypto-related businesses. That has been the case since 2017 when that was first promulgated. Nonetheless, we will bring this crypto discussion to an end. Since we have gone through a big crash, why don’t you iterate where your BTC and ETH targets are?
Ian: I mentioned before that I see BTC going to $115,000 by August. I still do believe that’s going to happen. I believe that BTC within the next 12 months will hit $350,000. ETH within the next 12 months will hit $8,000. I might have to update that because it got close before. It could be higher.
Paul: My to-the-moon targets are $250,000 for BTC and $20,000 for ETH, both in 12 months. You know we will hear from people on both. Bottom line, we are still bullish, optimistic, positive — BOP — on cryptocurrency, including BTC, ETH and others.
America 2.0 Stocks Take a Turn…
Ian, topic number two is the turnaround in our stocks in the stock market. It does look and feel like there is a turn in what we call America 2.0 stocks, Fourth Industrial Revolution stocks, stocks of the new world. Tell folks some of the things you are seeing.
Ian: This is playing out like I expected. At first I thought the stocks would see demand right after earnings. I thought the stocks were going to pop after earnings as a reaction because growth stocks usually have a big up or down movement. Turns out, most of them were down.
I think that gave a very good buy opportunity. I think the dips will continue to get bought. So far, that’s exactly what’s happened. This week has been the most bullish price action I have seen for growth stock in more than three months. It is looking like the after earnings buy story is coming true.
I do think that’s going to continue. Most of these companies, their businesses haven’t gotten worse. They are not in a worse position financially in terms of the rate at which they are growing. I think this is a good buy opportunity. Just like crypto, the only thing that has changed is the price.
They are still high-quality stocks. I think people are going to take note of that. I think we will see some sharp rebounds in the next couple months.
Paul: I was telling folks in the Profits Unlimited update that we have a perfect setup right now. The businesses represented by our stocks have been in growth mode, really hyper-growth mode, for more than 18 months or so. The future looks incredibly bright.
Yet, their stock prices have gone down. It creates a perfect setup. It’s a coiled spring setup. As demand comes in for our stocks, which are growth stocks, you are going to see them explode higher. I tweeted saying that I believe ewe are going to crush it in the second half of 2021 because of this setup.
I have been through situations just like this. I don’t know if you were in the markets in 2015 or early 2016, but growth stocks got destroyed. It was a crash. It was 50%, 60%, 70%. My accounts were devastated. However, coming out of that was a run that was so incredible.
It completely changed my accounts forever. It’s never looked back. I believe we could be on the verge of that. What do you think?
Ian: I agree. I was new to investing in a meaningful way, but it was within the first year I started putting money in the market consistently. It was a rough time for me. It actually taught me a lot. This time around I have a feel for what is going to go on. We even saw some temporary deep corrections in 2018 and 2019.
There was a lot of choppiness in growth stocks. 2020 was that spring up. I think we are definitely headed for another one of those.
Paul: The reason I thought 2015 and 2016 is because I remember a period in 2015 when they looked like they were going to be in a range and then it dropped off. The thing that made this similar to that.
Other stocks — back then we never had the term America 1.0 or America 2.0, but in hindsight they were old world stocks. They held fast and just growth stocks fell. Something similar has happened here, which is what made me think about it. It’s why it’s been hard for our subscribers and readers see those stocks holding their own or rising.
Ours, which are growing, the businesses are fantastic, the results are incredible and everyone can agree the promise of the future is there, it’s been very hard for many of our folks.
Ian: For sure. It’s not easy to watch America 1.0 companies, which we are constantly talking about not being good long-term investments, go up and watch our stocks tank a couple months. I think the move back up is going to be just as sharp as the move down. I think new highs are coming over the next few months.
I am definitely ready for it after the moves we have been seeing.
Paul: As I have been putting it: Our time cometh. I will actually say one more thing, which is from having experienced a few of these, on the next run the vast majority of folks having seen what happened the last few months are going to fade these gains.
In other words, they are going to sell them. These are usually when the stocks just keep running and keep running. I don’t know when it will be, perhaps two years out, people will come back to it. Because once people sell, it’s hard to change your mindset.
Call Options Are Increasingly Popular
Ian: Then you get FOMO (fear of missing out). You sold a stock at $30 and it’s $60 a month later. You say, “What did I do?” Then you buy back in and a million other people buy after you who did the same thing. That can create a long and huge run.
That’s what happened last year in growth stocks. A bunch of them rallied hundreds and hundreds of percent off the lows we saw in March.
Paul: Any information on the call data you have been looking at? You run two options services. For the most part we are in calls at Bold Profits. Anything on the call option data?
Ian: It actually looks very bullish, just like the stock prices, I started to see buying call options for these companies go up a couple weeks ago. It was a front-running signal in a way because you see people buy into options because they have a lot of conviction that stocks are going to go up significantly.
Options are way riskier. You have a higher possible return, but you are taking the risk of having a higher loss as well. When people are buying options, they think there’s going to be a big move in the stock that’s going to multiply what would be the gains if they bought the stock.
I saw the bullishness tick up a couple weeks ago and it’s still very bullish. Even the ETFs like ARKK and TAN the solar ETF are seeing higher call volume than they’ve seen in the last month or two.
Paul: You can look at the price action on many growth stocks and you can see there’s now, after three months of a significant down move, a hunger to own these. I have been telling folks in our services that what I learned from Wall Street is that buying happens in waves.
Somebody starts buying and they experience success. Other people see that success and they copy that position. Now there’s waves and waves of people who are buying quarter-point positions, half-percent positions. Now you have this enormous amount of buying month three or four that can rocket stocks higher.
Ian: Right. And another thing I am seeing is something important to look at with options. It’s called implied volatility (IV). It’s self explanatory. It’s what the options say the stock is going to do in the future, to put it plainly. Some of these would say the stock is going to go up 20% over the next three months.
That was at the low. It bottomed out and now we are starting to see that IV go up. The options are now pricing in bigger moves in the stocks, which means there’s demand that pushes up the price of those call options and creates a bullish atmosphere because you are seeing these projections go higher.
It can create demand that way too.
Paul: Bottom line: People are buying options because they think stock prices are going to be higher in the future. They are using options and making a leveraged bet. You can use $500 or $1,000 and control $3,000 or $5,000 worth of stock. Obviously, there’s more risk because if you make the wrong bet you could lose a lot of month.
There’s obviously upside in it because if you are right you can make a lot of money and it can come quickly. We have two options services at Bold Profits. One is called Rebound Profit Trader and the other is Rapid Profit Trader. We have been active again after nearly 30 days.
How long have we been feeling the market out?
Ian: It’s been more than a month. I think around 35 days for Rebound and more than six weeks for Rapid. So it was a while, but we have started adding trades again because this is the most bullish environment we have seen. It looks like a rebound is coming.
Paul: Shameless plug. It’s a great moment, in our opinion, to join our services and participate in what we believe is going to be a massive move higher that I believe is going to run for a significant period of time. Ian, anything else on our part of the stock market that we should tell folks?
Weekly Iancast Stock Roundup
Just going through our usual roundup. There’s nothing really on Tesla stock. We have obviously covered BTC. Tesla is under $600. The one thing I have seen is people seem flummoxed by the fact Cathie Wood and ARK Invest keep buying Tesla.
Ian: Tesla is still what I consider the king of America 2.0 stocks. I think Cathie Wood is doing the right thing to buy this dip. Tesla is still far from topping out in terms of growth. They are growing at an accelerated rate all the time. They are just getting started. They have had one or two mass-produced cars.
Elon even said he expects the Model Y to be the bestselling car in the world. That’s just the beginning. They have the Cybertruck and the Semi truck. Who knows what else. I bet they will introduce another car within this year. They are going to produce their own batteries in America.
They are setting up the gigafactory in Berlin to make batteries and Model Ys. They have their whole China business, which is great. On top of that, they have their energy business which is revolutionizing what we know as utilities. They have one of the biggest battery projects in the world in Texas.
They have their Autobidder platform which allows energy usage to flow easier on the grid. You can sell excess energy through Powerwall or buy as you need it through that system. You can’t do that with traditional utility companies. That’s going to be huge for them too.
Then they have their solar roofs, which Elon has said for the past several quarters that they don’t have enough workers to install the number of solar roofs that have been ordered. Like I said, they are just getting started. Tesla has way farther to go. I’ve said before I think it’s possible it hits $1,500 this year.
Paul: I am looking to have a Powerwall installed after seeing what happened in Texas earlier this year. I have a regular battery but I want to be able to run my house for at least one day without any concerns.
The old way is pretty clunky. You have to turn the grid off, turn something on, the Tesla stuff makes it seamless. The moment the power goes off, Tesla Powerwall comes on. In the future, like the car, they can make it smarter. It can communicate with other Powerwalls that are in proximity to each other.
Cathie Wood put out a price target for Tesla of $3,000 or $4,000. Do you remember?
Ian: I think it was $3,000, but don’t quote me on that.
Paul: There’s still significant upside in Tesla because of all the things Ian mentioned. We are BOP on Tesla, cannabis, crypto and America 2.0 and Fourth Industrial Revolution stocks.
Have a great weekend. I believe better times are ahead for our Strong Hands Nation.
Until then, this is Paul saying bye.
Editor, Rapid Profit Trader
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