Weeeee!! What a ride this past week has been! I haven’t experienced a drop like that since a ride on the Aerosmith Rockin’ Roller Coaster at Disneyworld. And I have to admit, I considered some selling, for a short while, until I collected my thoughts as I’ve outlined below, and decided to jettison the idea. Why? Let's recap the central ideas of my writings over the past 4 months. For a more fuller explanation of the ideas, refer to the past blog writings themselves.
On Aug. 29 I wrote: "The supply of Bitcoin is capped at 21 million. Differently than gold - which "leaks" about 2% of its value every year by way of an increase in the supply - bitcoin actually gets scarcer every four years because of a unique phenomenon called "halving". Gold won't grow in value in real terms. It just keeps pace with inflation; it doesn't outrun it because miners increase the supply of gold by about 2% per year." So Bitcoin is a better builder of wealth and store of value than gold.
On Sep. 2 I wrote: "Now that PayPal, Square, MicroStrategy and MassMutual are multi-million dollar holders of Bitcoin, they’ll usher in their army of lawyers and lobbyists to defend the network against overacting and overreaching regulators. And now that Fidelity, Blackrock, JPMorgan, Citigroup, and others on Wall Street are developing financial products to take advantage of the growing acceptance of Bitcoin, they will mobilize their formidable legal forces to ensure the U.S. government keeps its mitts off Bitcoin. As Bitcoin grows and attracts more powerful users, its defenses against external “invaders” will grow simultaneously. Wall Street is preparing to introduce a lot of securities products surrounding Bitcoin because they know they can make billions in fee income off these products. The global financial system has accepted Bitcoin into its “private club”, so-to-speak; so it’s going to award the largest of all cryptocurrencies (BTC) its full protection."
On Sep 10 I wrote: "For decades we’ve heard rumors of a dollar crash…But until now, no one alive has seen anything quite like this. A new crash is now underway and it’s happening fast. (Look to the graphs I provided in this blog post). Ever since the Fed announced unlimited money printing, the dollar has been in free fall, which is why I believe leaving most of your money in your bank account is a mistake. This means the vast majority of people who hold their savings in cash are essentially losing money, while a small fraction holding their wealth in Bitcoin could be making serious gains." As stated in the letter by the OCC in July 2020 to all banks, "Banks are officially able to hold cryptocurrencies as an asset, just like they hold a certificate of deposit. In other words, while traditional bank accounts could be all but destroyed by inflation and lose purchasing power, banks will be able to offer crypto accounts, which I’m confident will help protect against inflation and could make you wealthy. While our central bank is printing trillions of dollars, increasing the supply of dollars like never before" (and we know increased supply of any commodity leads to lower prices), "the supply of newly minted bitcoins is GUARANTEED to decline; which should push the price higher." As Fortune said: “The upshot is that big banks now have a green light to open crypto operations.” That means we could see billions and billions of dollars flowing into the crypto space. As Yahoo Finance says: “This is a huge step for the mass adoption of cryptocurrencies as it potentially opens the asset class up to millions of people in North America.” Banking expert Seamus Donoghue said… This move from the OCC “is another huge step towards mainstream institutionalization and retail access to cryptocurrencies.” Here’s another way of looking at it…if global investors reallocated just 5% of their financial assets to Bitcoin, that would be $14.7 trillion in increased demand. That alone is enough to push Bitcoin almost 15 times higher.
And I wrote: "Today the entire crypto market is only worth about $370 billion. Right now, 35–50 million people own crypto. That’s 0.6% of the world’s population. So we’re still in the early stages of adoption. We’ll see hundreds of millions (and probably billions) of people flood into this space in the coming months and years." "PayPal recently rolled out crypto trading to its 325 million users. Robinhood Crypto offers commission-free trades on seven cryptos to its 10 million users. Even Mastercard and Visa recently announced projects and collaborations involving crypto. And look at Fidelity, the largest provider of 401(k) retirement plan services. They just launched their first Bitcoin fund. Fidelity has over $7 trillion in assets under management. Imagine what that will do to Bitcoin if some of that money starts moving into crypto?" Reference the recent entry I entered Sat. in the "Did You Know" section of this website about Fidelity.
On Oct 8 I wrote: "a growing list of traditional financial entities are increasingly looking to move into the realm of digital asset trading/investments. Per the report, some 62% of global institutional investors with no current exposure to cryptocurrencies stated that they are looking to get into the crypto market within the next 12 months or so. The survey considered the views of 50 wealth managers and 50 institutional investors based out of different countries including the United States, United Kingdom, France, Germany and the United Arab Emirates. “There is no doubt that the crypto assets market is becoming more mainstream in the institutional and wealth management sectors,” the report stated."
On Nov 2 I wrote: The week prior the chair of the FDIC said that U.S. bank regulators are clarifying rules over banks "holding cryptocurrency in custody to facilitate client trading, using them as collateral for loans, or even holding them on their balance sheets like more traditional assets." providing the fullest picture yet of what regulators are exploring to ensure cryptocurrency policy coordination among the three main U.S. bank regulators - FDIC, Federal Reserve and Office of the Comptroller of the Currency. I said this as hugely bullish for Bitcoin as there are close to 5000 U.S. banks that the OCC wrote to, relieving them of regulatory exposure from the federal government. So U.S. banks will begin to buy Bitcoin going forward.
I also wrote in that post that Bitcoin miners are selling far less of their newly mined Bitcoin, since they're being offered cash by the traditional lending community now, so they no longer need to sell large amounts of their newly mined Bitcoin to pay for operating expenses. They can borrow at relatively low market rates to pay for the expenses of mining new Bitcoin and keep the more valuable Bitcoin on their balance sheets as a company. So the supply of newly mined Bitcoin coming to market is going to reduce dramatically going forward. Decreased supply in the market coupled with increased demand results in higher prices for the underlying commodity. (Econ 101).
Finally, my personal portfolio (which is what the service offered on this platform is designed to help you emulate, but without the mistakes I experienced in my learning curve) is filled with companies and their coins that I believe represent some companies that could go on to become some of the largest companies in the world over the next 5-10-15 years, as I outline on the Home page of this platform. Most of these coins experienced drops in prices of 20-25-30% this week, which they can easily overcome next week, unless I were to sell any of them and lock-in the losses, forgoing any opportunity to see those coins overcome the short-term losses and go on to ever higher highs. It's an opportunity for which I'm willing to wait.
So, a relatively short recollection and pondering of these facts in my own mind rather quickly led me to the conclusion that I would be downright foolish to sell most of the cryptocurrencies I hold in my portfolio today (perhaps just the foolish decision those institutions would want me to make so they can scoop up, on the "cheap", my (limited in supply) coins to add to their portfolio. Now, that being said, I am doing a little "pruning" in order to get rid of laggards and free up the cash for new purchases going forward, but the vast majority of my portfolio is in a "Hold" position for gains over the long-term going forward. That's my position. What are you thinking? What have you decided to do? Email me through the platform and let's dialogue.