We have been going nuts lately riding this Bitcoin rocket fuel to profits. But remember we are not being stupid about it. We are not selling every other asset and putting everything into Bitcoin. We are devising clever strategies to capitalize on the large institutional interest in Bitcoin that is fueling the surge. In other words, we remain committed to no more than 1-2% of assets be committed to Bitcoin.
First, A Synopsis of The Facts On The Ground
Most recently Bitcoin seems to have broken through some kind of psychological resistance to $40,000/coin. I recall when it was under $1,000 and I would ask, why would anyone pay a thousand for this line of code? Wow, hindsight! Here is our take on Bitcoin and crypto in general from investors/traders that have owned the coin for years.
Next Stop $50,000?
Active trades and investors seem to think that the next stop is $50k. There does not yet seem to be enough selling to make it fall and it continues to remain at key support levels, such as above $40k.
- Bitcoin seems to defy the common logic of assets and currencies. It is and isn’t an investment, asset, currency, etc. It could be a store of value, a new technology expression and a new way of trading value.
- Bitcoin is in the eye of the beholder. It is worth what the whole network of trades believe it is worth.
- There may be winners and losers, like a pyramid scheme. So keep an eye out for how the traditional fiat money is transferred via blockchain.
- Major institutions are taking positions and anyone can access Bitcoin via the CashApp. (SEE RELATED: Robinhood Vs. CashApp)
- One big draw of Bitcoin is that it is not manipulated by Governments. It is like the currency of the people of the world that believe in it and use it. in other words, there is a finite supply and more cannot be printed. Only 21 million can be “mined” and about 85% is already in circulation.
- But can it be manipulated by “whales” or foreign government actors? The lack of transparency makes this hard to predict.
- A historical example of perceived value was the great Tulip bulb craze of the 1600’s. At the peak of the mania, one Tulip (Hopefully quite perfect) sold for about the price of a house. This means that Bitcoin may have further to go. Perhaps I can pay off my mortgage with it someday. But a key difference is that in theory Bitcoin could be a store of value, whereas the Tulip was a thing of nature that eventually wilts away. On the other hand, bitcoin is simply lines of code in the blockchain.
- Bitcoin challenges our traditional beliefs of money and investing. What are any of our assets besides lines of code to us. The only tangible asset I own is real estate which I can actually touch and feel in the material world. Deep thoughts!
Institutional and Big Time Interest
Don’t take our word for it, check out this summary of large investor interest lately:
- Oct. 27: JPMorgan Chase (JPM) sends its “JPM Coin” digital currency live and forms an Onyx division to focus on the blockchain.
- Nov. 9: Billionaire investor Stanley Druckenmiller says he owns Bitcoin.
- Nov. 14: Galaxy Digital announced the acquisition of two companies as it builds out a platform for institutional access to digital assets.
- Nov. 18: Mexican billionaire Ricardo Salinas Pliego says 10% of his liquid assets are invested in Bitcoin.
- Dec. 9: Billionaire and hedge fund manager Ray Dalio says Bitcoin has a place in investors’ portfolios.
- Dec. 12: Insurance firm MassMutual purchases $100 million in Bitcoin
CEO of MicroStrategy Saylor sums it up:
“We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility, and community ethos of bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value,” Saylor said. “Bitcoin is digital gold — harder, stronger, faster, and smarter than any money that has preceded it.”
Dabbling but not going crazy
Our personal approach to crypto is to dabble but not lose our minds. Yes, this means holding some Bitcoin and alt coins as speculation. There is really no other use for them at the moment. With the exception of the CashApp, which to me has made Bitcoin a bit more useable. My personal rule of thumb is to hold some Bitcoin, but limit to 1-2% of total assets.
I have been playing a little game to get free meals using Bitcoin and CashApp. So I buy some Bitcoin on CashApp. Watch it go up and take the profits. It makes me like $30 so I can go buy my family lunch or dinner. Then I use a CashApp boost as well for a little extra savings. Those dinners and lunches taste so much better knowing that they came from Bitcoin profits, Buon appetite!
Ok, I know that is silly, but just trying to give a sense of how I am using crypto at this point. In other words, yes, we are using and investing in it. But we are not going to dump hundreds of thousands in.
A Crazy Idea?
Lately Bitcoin seems to be going up about $10,000 every two weeks. The growth appears exponential. Long term some analysts seem to think it will settle at about $145,000. So on the ride there, what if one purchase an entire Bitcoin. Then as the $10k marks were reached, take small amounts of fractional profit off the top to pay a large bill like the mortgage.
At the moment we are doing this at a micro level, to buy things like Chinese food. But on a broader scale this could be used to generate thousands of dollars until the Bitcoin runs out.
Beyond paying the mortgage, I do believe blockchain technology has some potential to change the real estate industry. The real estate industry relies on chains of title and expensive title insurance. Blockchain could revolutionize all this and save consumers billions. Your welcome for this multi million dollar idea, let me know if you would like to go into business? 😉