BITCOIN BLASTOFF? (21-1-2024)
( Why it is still possible to earn huge returns in Bitcoin)
On January 3rd, 2024, Bitcoin turned 15. The original Bitcoin white paper was published on 10/31/08. Bitcoin started at less than a penny, and was worth 30 cents at the end of 2010. Today, in the $40,000 range in mid-January of 2024, it is the single best investment (in terms of growth or return) in history! Per the original protocol, when it is all said and done, there will be a total of 21 million Bitcoins in existence-period. We are at approximately 19.6 million today, and it is estimated that about 15-16 million are held in tight strong hands, so there is very little supply of Bitcoin and the supply of new Bitcoins is about to be reduced again soon.
Despite this absolutely amazing record of growth, the majority (perhaps the vast majority?) of people do not regard it as a legitimate investment or financial vehicle! In fact, many people still call it a “scam”, which is “backed by nothing”, and which is a crazy, rank speculation, akin to a roll of the dice at a casino. And this, after the most magnificent run-up in the history of investments!
Why would this be the case? How could the average investor, who is paying attention to things to at least some degree over the past 10-15 years still think that Bitcoin is a scam to be avoided, and that it will collapse and blow away in the wind at any time now?
My best guess is that a relentless and strident (and obviously false) campaign by the mainstream financial media, and other big-name pundits or financial figures, such as Warren Buffett, Goldman Sachs and Jamie Dimon, of JP Morgan Chase, to denigrate and cast aspersions on Bitcoin, has largely worked. In fact, “legendary” investor Warren Buffett on 5/5/18 called Bitcoin, “rat poison squared”! If you bought Bitcoin on the day, he said that, when it was trading at $9,695, you are up over 4 times in just five and a half years. The S&P 500 index is up only about 80% since then!
Of course, The IMF and US government and all of these mainstream people and sources have a strong vested interest in keeping everyone away from Bitcoin and totally into paper investments only. For many years, these global mainstream sources told us that Bitcoin was only used by bad people involved with money laundering, human trafficking, illegal drug dealing, illegal weapons purchasing, etc., on the dark web, but the truth is that the number one currency used for all of those nefarious purposes has been and remains the US dollar. While Bitcoin has been used as well for these reprehensible transactions, we always see incredible amounts of paper US dollars in the closets or walls of the drug dealers when they are caught!
Bitcoin represents a big threat to the central banks and the standard operating procedures of the world’s financial markets, as it is a private peer to peer “currency” that is outside the control of the banks and regulators. So, if you can keep an open mind, let’s take a look at why Bitcoin still can give you an opportunity for superior growth, and possibly help you make up for some lost time, on the retirement assets accumulation front….
There is a confluence of 3-4 large and very positive events occurring in the near term for Bitcoin….
The next “halving event” will occur on 4/25/24. This means that the amount of Bitcoins awarded to the people who “mine” Bitcoins will fall in half, from 6.25 BTC per block reward, to 3.125. This is why I believe the demand that is coming from these three sources below will lead to much much higher prices for BTC in the coming months and years.- On 9/6/23 the Financial Accounting Standards Board (FASB) approved its cryptocurrency asset standards in terms of accounting and disclosure requirements for corporations. This will make it easier and more likely that corporations holding large amounts of cash to convert some of that cash to Bitcoin, or other cryptos.
- On 1/10/24, the SEC approved 11 new cash BITCOIN ETFs (Exchange Traded Funds) after a three-year battle that went into the courts. The SEC did not want to approve these convenient vehicle investors, as the US government, and the entire paper/dollar-based world sees Bitcoin as a threat-as they should.
Bitcoin is NOT under the control of central banks, or the SEC, or any government! Realistically, we can expect a growing torrent of money coming into BTC through these ETFs, particularly as people become more and more concerned about the health of the banks, and the dollar. We recently reached the $34 trillion level on the national debt and are facing another year of at least a $2 trillion deficit in 2024, so the recognition that they should get some money out of the dollar and into gold or silver or Bitcoin, or farmland, or fine art, etc., etc. will be occurring to more and more people. In fact, depending on what happens with the banks, and inflation and the dollar, there may eventually be a stampede into these dollar hedges in the future.
If even a small percentage of the investing public eventually commits even a very small percentage of their portfolios (1%? 2%? 3%?) to Bitcoin, using one of the 11 newly approved ETF’s, a torrent of money would force the price of Bitcoin higher.
Similarly, if a couple more Michael Saylors (Michael Saylor is the CEO of MicroStrategy, and is the first large corporate buyer – using MicroStrategy’s funds of Bitcoin, started buying in 2020. As of late 2023, MSTR had a total of roughly 158,000 BTC, at an average cost of $36,785 per BTC, which is currently valued at approx. $7B) decided to invest a portion of their corporate cash into BTC, which would obviously be some significant money, there would be more upward pressure on the price of BTC.
- Finally, the catalyst on the near-term horizon that could cause the price of Bitcoin to skyrocket by maybe a factor of 10-20 times from here is the possibility of one or two or more countries deciding to adopt Bitcoin as an alternative currency a strategic national asset. There have been persistent rumors that 2-3 nations in South America and 2-3 nations in the Middle East (Qatar? UAE? Saudi Arabia?) are considering very substantial purchases of Bitcoin.
Where would the supply come from for these large purchases? At what price level would todays BTC holders be willing to sell their BTC to these large national buyers? $100,000? $250,000? $500,000? per bitcoin? We don’t know, but it appears that there is a confluence of very positive events occurring right now in the Bitcoin world that should lead all open-minded people to consider adding some BTC to their overall portfolios, while it is still available at these price levels!
NOTE – Bitcoin hit a high of $68,789 on 11/10/21, so here in the $38-42,000 range, it is still down about 40% from its highs, even though it has all of the potential catalysts noted above.
