Bitcoin is down 16% from its November peak.
It’s gotten a lot of folks wondering if we’ll see another “Crypto Winter” bear market.
That was when bitcoin plunged more than 80% from December 2017 to December 2018.
But as you’ll see, another drop of that size is highly unlikely… for two important reasons.
Our advice: Don’t let fear of another big downswing shake you out of crypto.
It’s all in your Weekly Pulse video with me and host Tom Beal.
Editor, The Daily Cut and Legacy Inner Circle
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Tom Beal: What are some of the strategies to handle the volatility of bitcoin? And how can you use these strategies to grow and protect your wealth in the upcoming years?
My name is Tom Beal, host of The Weekly Pulse, where we break down the biggest wealth-growth story of the week. I’m here today with the editor of Legacy Inner Circle, Chris Lowe.
Chris, how do we kick off today’s conversation?
Chris Lowe: Tom, today, I thought we’d talk about what is probably one of the most popular investments among Legacy Research readers and viewers, which is bitcoin.
Bitcoin hit a high of $67,673 on November 8. Today, it trades for around $58,083. That’s a fall of about 14%.
The big question a lot of folks have is whether this 14% correction could turn into a much steeper bear market, like the kind we saw back in 2017/2018. That was the so-called Crypto Winter bear market, where bitcoin and a lot of the other cryptos fell in the 80% to 85% range.
So today, I thought we’d talk about some of the advice our crypto investing expert here at Legacy Research, Teeka Tiwari, has been passing on to his readers. He thinks it’s very unlikely we’re going to get that kind of 80% correction, or rather a bear market of 80%, in bitcoin.
Then, I want to pass on one crucially important piece of advice that Teeka hammers on all the time. It’s about how to make sure you don’t let volatility shake you out of bitcoin and other cryptos.
Tom: I think this is a pertinent topic. I definitely want to hear what Teeka has to say. The price of admission for the large returns is the volatility, the high ups and downs.
My question is exactly what you posed there. Is this going to be similar to the trend, where it had that 80%-plus dip? Or is it going to be like one of the previous years, when the end of the year had a huge spike? Is it going to be bearish or bullish?
I’d love to hear what Teeka has to say. I have a vested interest in it, as do owners of bitcoin who watch The Weekly Pulse. I’m all ears.
Chris: Let’s just take a look at what happened in that infamous Crypto Winter bear market in 2017/2018. Bitcoin hit a high of $19,497 on December 10, 2017. It went all the way down to $3,236 about a year later, December 8, 2018. That’s an 83% fall.
That’s an incredibly difficult time if you have some of your wealth in bitcoin. It’s incredibly difficult in any kind of asset to see the price go down 80%.
But the important thing that Teeka has been talking about to his readers is that that is highly unlikely to happen this time around. That’s because of the makeup of the bitcoin and crypto market. It’s actually changing. We’re not really in the same market we were in 2017 and 2018.
That’s because of the institutional money coming into bitcoin. These days, as Teeka has been saying, institutional money is a much bigger part of the market.
Back in the Crypto Winter era, the crypto market was much more dominated by individual investors, folks like you and me. And individual investors tend to be a lot more skittish. They tend to do the wrong things. They’re not professionals, so they can often get panicked when they see prices falling, and they sell.
Institutional money, things like insurance funds and endowments, do things very differently. They tend to take advantage of the dips, to take advantage of the prices that are on offer when an asset goes down in price. Because really, when an asset goes down in price, you get a discount on the price you would have paid when it was up at a high.
Institutional investors tend to understand that better than individual investors, so they tend to buy at the dips.
There’s another thing they tend to do, and this is, again, something that Teeka has been talking about. They do something called “dollar cost averaging.” That just means they take a chunk of money each week, or each month, and they put it into that asset, regardless of the price. They have this kind of automated buying.
That, together with buying the dips, should help stabilize the price of bitcoin and dampen down some of that extreme volatility we saw back during Crypto Winter.
Now, Teeka is not saying that there’s going to be no more volatility in crypto, or in bitcoin specifically. There’s going to be plenty of it. But Teeka says for bitcoin, it’s more likely to be in the 15% to 30% range, not in that 80% or 90% range.
Tom: I have much more stability in my own mind and don’t get emotionally tied up in the highs and lows, similar to what you mentioned with the dollar cost average. I see the future, where Teeka has pointed, and made it very clear to me as to where it’s going, which is much larger than what it is now.
If we think back to when it was $3,000, it’s close to $60,000 at the time of this recording. That’s a huge increase. So if you’re using dollar cost averaging, you’re going to win big over time and not freak out. If you don’t freak out, and you stick with it being very bullish in the upcoming years, this is a discount.
And if it does have a dip of 15%, 30%, 50%, whatever that dip is, if you’re using dollar cost averaging, you’re going to get in and have big returns on that. Plus, you aren’t going to freak out wondering, “Should I sell?”
For me, I have stability in knowing and trusting not just Teeka, but many other crypto experts. But Teeka is my go-to person. When he speaks, I listen. When I follow his advice, it works out very well.
So don’t freak out with the dips. Use the dollar cost averaging that Chris just shared with you. And know that the future is looking very bright, due to the unique, limited supply of bitcoin. It is truly a resource with only so many. There can’t be any more produced. So the supply and demand over the years will play out very nicely for all of us with bitcoin.
Chris: That’s something Teeka focuses on a lot. You’re right to say that bitcoin has a very fixed supply. We know what it’s going to be. It hits 21 million coins and there can’t be any more.
Teeka is also very focused on the adoption rate. Adoption is what is really behind the rise in price of bitcoin. It’s the adoption rate that drives prices.
One thing that caught my eye when I was reading through some of the recent research he put out is that only 100 million people right now own crypto. There are 6 billion people on the planet who own a smartphone.
So we’re at the very early stages. It may not seem like it, because crypto has matured a lot since we started talking and writing about it here at Legacy Research back in 2016.
It was around $400 when Teeka first recommended bitcoin in April 2016. And we’re up to nearly $60,000 now. So that is a big runup.
But it’s very important to get that high-level view and see, wow, it’s 100 million people out of potentially 6 billion people, let’s say, who could own bitcoin on their smartphone via a wallet.
That’s why Teeka has put a target on bitcoin. He says by 2025, that increase in adoption is going to put one bitcoin at about $500,000. He’s convinced that in the next four years, we’re going to see bitcoin hit $500,000.
That’s still a huge runup from $60,000, where we’re at today. That’s why Teeka is constantly reminding folks to try to ignore the day-to-day, the week-to-week, and the month-to-month volatility.
That 14% loss we talked about at the top of this update can seem like a lot. But in the big picture, it really isn’t much to think about. The long-term picture is so bright for bitcoin. We just have to accept that volatility is the price of admission you pay to be in with the chance to make life-changing gains in crypto.
That is the big takeaway I have for readers this week who are concerned seeing bitcoin drop. They’re worried they’re going to see it drop a lot more. Think about how that market is changing. Many more institutional investors, people who know what they’re doing, are buying the dips and dollar cost averaging. So we should see a more dampened level of volatility.
And the second really important takeaway is to keep the focus on the long term. Don’t check the bitcoin price, if you can avoid it. Just focus on that long-term adoption curve and Teeka’s price target of $500,000 per bitcoin by 2025.
Tom: Chris, that puts me more at ease, hearing you share some of the advice and wisdom from Teeka’s research with us here today. It has me excited for the future as well.
Hopefully, that is what you are feeling here as a viewer of The Weekly Pulse. We’re committed to helping you grow and protect your wealth. This is one of the things that, as Teeka mentions and Chris has shared with us today, has a bright future in the upcoming years.
So take a closer look, if you haven’t done so already. Don’t freak out with the volatility, the ups and the downs. Know that in the long term, it can be one of the tools that can possibly be a trajectory modifier for you in growing and protecting your wealth in the future.
Thank you, Chris.
Chris: Thanks, Tom.
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