Another contrarian bet from the team pays off…
In the wake of the collapse of Silvergate Bank and Silicon Valley Bank (“SVB”) last month, colleague Teeka Tiwari began beating the drum on the opportunity in bitcoin.
Both banks were lenders to crypto companies. And it sent bitcoin tumbling.
But instead of dashing for the exits along with the crowd, Teeka urged his readers to use the opportunity to pick up bitcoin at a discount.
On March 10 – the day SVB went under – he sent a video alert to followers of our crypto investing advisory, Palm Beach Confidential. (Confidential subscribers can watch it here.) And he gave specific buying instructions. Teeka…
These opportunistic selloffs that we’re seeing, which have nothing to do with the underlying fundamentals, are great buying opportunities… I’ve said before that below $20,000, you can put opportunistic capital to work.
Here’s what happened next…
Bitcoin bottomed just below $20,000 on March 10. Since then, it’s up 39%.
If you haven’t yet bought bitcoin, it’s not too late. And following Teeka’s contrarian strategy is one of the best long-term bets you can make.
Bitcoin is a famously volatile asset…
Said differently, its price bounces around a lot.
You can see what I mean in this long-term chart of bitcoin. The cryptocurrency has gone through a series of peaks and troughs.
The media portrays this volatility as dangerous. As a result, most investors steer clear.
And that’s a pity…. As Teeka has shown, you can use that volatility to your advantage.
He identified another contrarian setup in July 2018…
This was during the first “Crypto Winter” bear market. Bitcoin had plunged 84% from the all-time high it had set in December 2017.
When most folks see an asset down that much they run for the hills. But Teeka isn’t like most folks. His contrarian instinct told him it was time to buy. Teeka…
In 2018, the mainstream media was littered with bitcoin obituaries. JPMorgan Chase CEO Jamie Dimon – one of the most influential voices in finance – called bitcoin a “fraud.” But behind closed doors his firm was planning on getting into crypto in a big way.
So, I did an interview with independent media personality Glenn Beck. Nearly 5 million viewers tuned in. And I exposed a bunch of hypocrisy like this. Other big players were saying one thing about crypto in public… But privately, they were doing the complete opposite.
In that interview, I predicted bitcoin would go to $40,000. People thought I was nuts. But 2018 was such a rare and historic buying opportunity… I had to act.
By the time the next bull run was over, bitcoin had peaked near $70,000.
That’s 10x return from where bitcoin was trading when Teeka made his call.
That’s the power of buying bitcoin opportunistically…
Instead of letting its volatility put you off, you can use it to buy at deep discounts.
And it’s a mathematical certainty that the lower the price you pay to own bitcoin, the higher your profits will be when you go to sell.
And bitcoin has been a proven winner for investors who take a long-term view. Teeka again…
Bitcoin is famously volatile. And that gets a lot of negative attention. But over any four-year rolling period, bitcoin investors have never lost money in bitcoin.
The worst four-year period my team and I could find was between December 2017 and December 2021. And over that time, it returned 150%. Even in today’s crypto bear market, you’d be up 429% from four years ago.
That buries every other asset you can think of – stocks, bonds, real estate, collectibles, you name it.
The future may not be like the past. And that’s an important caveat. But there are plenty of fundamental reasons to like bitcoin right now.
The first is the banking crisis…
This year, we’ve seen the worst bank runs since the 1930s. And as I’ve been showing you, bitcoin was designed to keep folks safe from bank runs and collapses.
The bitcoin network got going on January 3, 2009. That’s when an anonymous developer called Satoshi Nakamoto released the Genesis Block. It’s the original “block,” or group of transactions, on the bitcoin blockchain.
That’s four months after Lehman Brothers collapsed and the global financial crisis began in earnest.
And Satoshi left a message in its code…
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
It’s from a headline in the Times of London about the British government’s bank bailouts.
Satoshi was reminding us of banks’ inherent instability…
Bitcoin is decentralized. So, it eliminates the need for a commercial bank such as SVB to look after deposits and facilitate payments.
You can self-custody your bitcoin in a wallet app on your phone. You can send and receive payments through your wallet, too. Banks don’t come into it.
And bitcoin ran smoothly while the banks stumbled…
As all hell was breaking lose in the banking system in March, the bitcoin network chugged along without a hitch through the crisis.
Nobody lost access to their bitcoins… Nobody tried to call customer service and couldn’t get through… No regulator had to rush in to back anyone’s bitcoin.
That got people’s attention. Because bitcoin was doing exactly what it was supposed to do – provide an alternative to the banks.
And soon, it won’t be just banks folks are worried about…
Treasury bonds… and the dollar… could be the next source of concern.
As you probably know, a Republican-controlled Congress is playing a game of chicken with the Biden White House.
Republicans want the president to agree on a raft of spending cuts, or they’ll refuse to raise the debt ceiling.
It’s the limit Congress imposes on the Treasury’s total borrowing.
Due to a quirk in the U.S. system, it doesn’t automatically go up when Congress approves spending.
Most analysts think Republicans will raise the debt limit at the last minute. That’s what’s happened in the past when we’ve had these standoffs.
But as you’ll see later this week in these pages, there are ominous signs that we could get a messier outcome this time around.
It could cause U.S. Treasury bonds to lose their haven status… and even a rout in the U.S. dollar.
And that could be the next catalyst in the bitcoin rally.
I don’t have time to cover this in detail in today’s dispatch. But I’ll be back with more on this later this week.
Meantime, consider buying some bitcoin at today’s prices. If the debt ceiling clash spirals out of control… it could be the last time bitcoin is this cheap.
Regards,
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Chris Lowe
Editor, The Daily Cut